Raising interest rates by the Federal Reserve is negative for bonds, because raising interest rates will cause bond interest rates to rise. In the past, the yield of old bonds will be lower than that of newly issued bonds, which will cause a bear market for bonds. However, bond income will be Interest rates are determined by bond prices, and bond interest rates are inversely related to bond prices, so even if bonds are in a bear market, investors can still get part of the income.

The Federal Reserve, the full name of the U.S. Federal Reserve System, is the institution that formulates monetary policy in the United States. Like our country’s central bank, its responsibilities are to maintain reasonable regional inflation levels and stabilize financial markets, that is, to tighten when inflation occurs. monetary policy, such as raising interest rates, and in times of deflation, adopting loose monetary policies, such as cutting interest rates.

Corporate bonds refer to loan certificates issued by joint-stock companies for additional capital within a certain period of time (such as 10 years or 20 years). For the holder, it is just a certificate providing a loan to the company, and it reflects only an ordinary creditor-debt relationship. Although the holder has no right to participate in the management activities of the joint-stock company, he can charge fixed interest from the company every year according to the provisions of the coupon, and the order of interest collection must be before the shareholder dividends. The principal can also be recovered first when the joint-stock company goes bankrupt and liquidates. Corporate bonds have longer maturities, usually more than 10 years. Once the bonds mature, the joint-stock company must repay the principal and redeem the bonds.

Basic concepts:

The Commercial Press's "English-Chinese Securities Investment Dictionary" explains: corporate bond English: corporate bond. Also: corporate debt. An instrument used by a private or public company to borrow debt. Securities issued by a company in accordance with legal procedures and with an agreement to repay principal and interest within a certain period of time.

Basic overview:

The concept of corporate bonds is basically defined in textbooks as follows: “Corporate bonds are issued by a company in accordance with legal procedures and agree to repay principal and interest within a certain period of time. securities". At the same time, it is further explained that it shows the creditor-debt relationship between the company that issues bonds and bond investors. The holders of corporate bonds are the creditors of the company, not the owners of the company, which is the biggest difference from stock holders. , the bond holders have the right to obtain interest from the company and recover the principal upon maturity according to the agreed conditions. The interest obtained has priority over shareholder dividends. When the company goes bankrupt and liquidates, it also has the right to recover the principal before the shareholders. However, bond holders cannot participate in the company's operations, management and other activities.

The above statement is undoubtedly correct in its definition and explanation of "corporate bonds". However, if you want to truly understand the concept of corporate bonds theoretically, you must also conduct the following analysis:

Essence:

First of all, as a "security", corporate bonds are not ordinary Items or commodities, but "legal documents that prove economic rights and interests." "Securities" is a collective term for various types of creditor's rights and property ownership certificates that can obtain a certain amount of income. It is a certificate used to prove that the security holder owns and obtains corresponding rights and interests.

Secondly, corporate bonds are "marketable securities", which reflect and represent a certain economic value, have broad social acceptance, and can generally be transferred as a circulating financial instrument. Therefore, in this sense, "marketable securities" are a kind of ownership certificate, which generally must indicate the face amount, proving that the holder has the right to obtain a certain amount of income on a regular basis, and can be freely transferred and bought and sold. It has no value in itself, but It represents a certain amount of property rights. Holders can directly obtain a certain amount of commodities, currency, interest, dividends and other income. Because such securities can be bought, sold and circulated in the securities market, they objectively have a trading price.