Corporate Bonds
Corporate bonds historically have been viewed as safer than stocks. At least in part, this is because bonds have a claim on earnings and assets that ranks ahead of all equity securities in a corporation's capital structure. A bondholder is a creditor of the issuing corporation. A shareholder, on the other hand, is a part owner and is entitled only to a proportionate share of residual assets and earnings, if any. Thus, if financial problems result in the liquidation of a company, bondholders have greater protection in getting at least some return on their investment.
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