A bond issued by a company; it yields more than a government bond
A corporate bond is issued when a company borrows money. Because a company is more likely to default than a national government, its bonds are priced to yield more. Within the same company, a stock's value moves with results, while the bond promises fixed interest and repayment of face value. If the company is wound up, bondholders are repaid before shareholders.
If a government bond of the same term yields 1% and the corporate bond yields 2%, that 1% gap is the price of credit.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.