Corporate Bond

Definition: A bond that is issued by a corporation to investors.  Corporate bonds are given letter grades based on how strong the company is, financially.  A bond with a low letter grade is often considered "risky", while a bond with a high letter grade is considered "safe."

TeenAnalyst Advice: Corporate bonds are not considered to be as safe as treasury bonds (bonds that are issued by the government).  For this reason, it's important to keep up to date with the financial condition of the company.

Bondholders often actively express their opinions when it comes to a company.  If they think the company is doing something that will make it harder to pay their debts, bondholders will call them out on it.  After all, they want to get their money back!

If a company goes bankrupt, bondholders are paid back before stockholders.