Investments, tenth edition

  Corporate Bonds 

 

Like the government, corporations borrow money by issuing bonds.  

Figure  14.2 

 is a 

sample of listings for a few actively traded corporate bonds. Although some bonds trade 

bod61671_ch14_445-486.indd   447

bod61671_ch14_445-486.indd   447

7/17/13   3:51 PM

7/17/13   3:51 PM

Final PDF to printer

---

448

P A R T   I V

 Fixed-Income 

Securities

electronically on the NYSE Bonds platform, most bonds are traded over-the-counter in 

a network of bond dealers linked by a computer quotation system. In practice, the bond 

market can be quite “thin,” with few investors interested in trading a particular issue at any 

particular time.  

 The bond listings in  Figure 14.2  include the coupon, maturity, price, and yield to matu-

rity of each bond. The “rating” column is the estimation of bond safety given by the three 

major bond-rating agencies—Moody’s, Standard & Poor’s, and Fitch. Bonds with grada-

tions of A ratings are safer than those with B ratings or below. As a general rule, safer 

bonds with higher ratings promise lower yields to maturity than other bonds with similar 

maturities. We will return to this topic toward the end of the chapter.