Corporate Bond.
A definition, in plain English — with the books that teach it.
What it means
Corporate bonds are debt securities issued by companies to raise capital, offering investors a fixed or floating interest payment in exchange for a loan. They sit above equity in the capital structure, meaning bondholders get paid before shareholders in a bankruptcy. Corporate bonds are rated by agencies like Moody's and S&P — investment-grade bonds (BBB− and above) carry lower default risk and yield, while below-investment-grade bonds ("junk bonds") offer higher yields to compensate for elevated credit risk.
Example
Apple issues 10-year bonds at a 4.1% coupon when 10-year Treasuries yield 3.8%. The 30-basis-point credit spread reflects Apple's AAA-equivalent creditworthiness. An investor holding $50,000 worth receives $2,050/year in interest until 2034, when the principal is repaid.
