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Finance Dictionary and Glossary of Investment Terms
Debt obligations issued by corporations.
Bonds issued by private corporations rather than by governments. Most corporate bonds pay somewhat higher interest than bonds backed by the full faith and credit of the U.S. or by local government taxing powers, but government bonds usually carry tax advantages.Jane Bryant Quinn, writing in ""Making the Most of Your Money,"" says you might want to buy a corporate bond if:1. You''re investing with tax-deferred money in your retirement plan and want more interest than Treasuries pay. Corporates are fully taxable by federal, state and local governments.2. You''re in the 15 percent federal tax bracket. At that level, you will net more, after tax, from taxable corporate bonds than from tax-exempts.3. You want a utility bond, for its high and reliable interest payments.Quinn says one of the best ways to invest in corporate bonds is via a good, diversified mutual fund. ""Always remember, however, that to buy a long-term bond fund is to bet that interest rates won''t rise over the period that you expect to hold the investment.""