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What happens when a corporate bond matures?

When the bond matures at the end of the period, the borrower repays the bond’s principal, and the agreement is concluded. A corporate bond is a bond issued by a company, often a publicly traded company.

What happens when you buy a corporate bond?

When you purchase a corporate bond, you are in effect lending money to the corporation issuing the bond. In exchange, you receive interest payments at predetermined installments until the bond's term expires. Once the bond reaches maturity, the corporation pays back the principal.

Should you hold a corporate bond or a government bond?

There are also tax implications to holding corporate bonds. If you'll hold bonds in a taxable account, Treasury bonds may be the better choice. They may pay a lower yield, but after the taxes on corporate bond interest, a tax-free government bond could mean more after-tax total income. Let's start with credit ratings.

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