A corporate bond is a type of debt security issued by a company to raise capital. When investors buy these bonds, they are essentially lending money to the company in exchange for periodic interest payments and the return of the bond's face value at maturity. Corporate bonds are typically considered less risky than stocks but carry more risk than government bonds. Investors often evaluate corporate bonds based on the issuing company's credit rating, which reflects its ability to repay debt. Ratings are provided by agencies like Moody's and Standard & Poor's. Higher-rated bonds usually offer lower interest rates, while lower-rated bonds, known as junk bonds, offer higher yields to compensate for increased risk.