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Glossary entry · What you own
Corporate bond
Definition
Debt issued by a corporation to raise money. Pays a higher interest rate than government bonds because corporations can, and sometimes do, go bankrupt. Rated by agencies like S&P and Moody's; "investment grade" is safer, "high-yield" or "junk" is riskier with higher coupons.
Example
A 10-year Apple bond might pay 4.8%, slightly more than a 10-year US Treasury at 4.5%.
Related
What you own
Stock
A share of ownership in a company. You profit if the company grows; you lose if it falters.
Read →Bond
A loan you make to a government or company. They pay you interest, then return your money.
Read →ETF
A basket of many investments, often hundreds, bought in a single transaction.
Read →Index
A representative basket of a market, like the S&P 500 or the IBEX 35.
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