What is the difference between a corporate bond and a stock?

An investor who buys a corporate bond is lending money to the company. An investor who buys stock is buying an ownership share of the company. The value of a stock rises and falls, and the investor's stake rises or falls with it.

What is a corporate bond?

A corporate bond is a loan to a company. Investors receive interest until the bond matures and the principal is repaid. Corporate bonds tend to be a less risky investment than stocks, but involve more risk than Treasury or municipal bonds. Corporate bonds vary in their maturity, interest payments and credit rating.

What are the different types of corporate bonds?

Corporate bonds fall into different categories depending on their maturity, interest payments and credit rating. Term lengths for corporate bonds can range from one to 30 years, but they are generally classified as: Long term (more than 10 years).