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What is a corporate bond?

Corporate bonds are investments representing the debt of a company. Effectively they are loans, or "IOUs" issued by companies and bought by banks, insurance companies, fund managers and private investors. The company will pay interest to the holder each year for a set period of time. At the end of the life of the bond investors will normally receive a fixed payment, called par.

Corporate bonds will typically trade on a stock exchange and can be bought and sold by investors during the life of the bond. Please note: the price of a bond will be determined by supply and demand and investors who sell their bond before the redemption date may get back less than they invest.

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