Types of Corporate Bond
A bond is a long-term contract under which a borrower agrees to make payments of interest and principal on specific dates to the holders of the bond. It is long-term debt security or long-term promissory note having a maturity period of more than one year. Bonds are issued by corporations and government agencies that are looking for long-term debt capital. The borrower of the securities promises to pay fixed periodic interest till the maturity period and at the end maturity value or face value as well.
The interest payment is called coupon payment. In the issuance of a bond the legal document indenture is prepared which specifies the right and duties and all the terms and conditions related to bonds. The indenture also specifies the rights and responsibilities of the trustee.