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Corporate bonds: A term paper

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  1. Introduction
  2. Corporate bonds and investors
  3. Importance of corporate bonds
  4. Evaluation of the bonds
  5. The circumstances that affect corporate bonds' performance
  6. Issue of corporate bonds
  7. Purchasing a corporate bond
  8. Trading corporate bonds
  9. Conclusion
  10. Sources

Corporate Bonds are debt obligations issued by corporations as an alternative to issuing stock when raising capital. They are an alternative to issuing new shares on the stock market, and they are a form of debt finance. Companies of all sizes issue corporate bonds. In the United States today, corporate bonds are typically issued in par value of $1000 and in some cases $5000. This amount is usually pre-determined and paid semiannually. The interest that is received from the corporate bonds is taxable, and it must be declared. Both individuals and institutions may invest into corporate bonds.

[...] On the physical market, the brokerage you pay is a lot higher than what you do while trading online. The online trading firms charge a nominal brokerage which hardly affects your margin. There are also disadvantages associated with online trading. With online trading, the individual must do all research before investing. With physical brokerage firms, all investment information and suggestions are given to you. With online trading, the individual must do all research themselves before purchasing. Online brokers do not normally offer this service, which is why they can charge such low commissions. [...]

[...] In the financial world, investors may purchase corporate bonds because of possible personal and/or business related interests. For example, investors may purchase bonds from a corporation that may be attempting to finance a major project in a local city. Investors may choose to invest because the project could bring indirect benefits to the city through additional business and revenue, in addition to direct benefits such as the receipt of regular interest payments. Investors also evaluate benefits. For instance, one benefit is the steady income that can be obtained. [...]

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