A Corporate Bond is a debt instrument issued by a company to raise funds, where investors lend money in exchange for periodic interest payments and repayment of principal at maturity.
Corporate Bonds are issued by companies to finance business activities such as expansion, operations, or refinancing debt. Investors who buy these bonds receive fixed or variable interest (coupon) and the principal amount at maturity.
Compared to government bonds, corporate bonds generally offer higher returns but come with higher risk depending on the company’s financial strength.
Corporate bonds are suitable for investors seeking higher fixed-income returns with moderate risk.
"A company issues a ₹10,000 bond at 8% interest for 5 years. The investor earns ₹800 annually and receives ₹10,000 at maturity."