Answer :
Corporate Bonds has the highest priority with regard to the distribution of both earnings and proceeds from the liquidation of assets of a firm. Common stock is the last among them.
Similar to an IOU, a bond is a debt obligation. By purchasing corporate bonds, investors are making a loan to the corporation issuing the bond. In exchange, the business agrees in writing to pay interest on the principal when the bond matures and, in most situations, to return the principal.
For instance, a $1,000 face value, five-year, zero-coupon bond could be bought by an investor for $800. When the bond reaches maturity, the business pays $1,000, which is equal to the $800 purchase price plus interest, or the $200 original issue discount, for the first five years.
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