FRANK J. FABOZZI, PH.D., CFA, CPA
Professor of FinanceEDHEC Business School
STEVEN V. MANN, PH.D.
Professor of FinanceMoore School of BusinessUniversity of South Carolina
ADAM B. COHEN, J.D.
In its simplest form, a corporate bond is a debt instrument that obligates the issuer to pay a specified percentage of the bond’s par value on designated dates (the coupon payments) and to repay the bond’s par or principal value at maturity. Failure to pay the interest and/or principal when due (and to meet other of the debt’s provisions) in accordance with the instrument’s terms constitutes legal default, and court proceedings can be instituted to enforce the contract. Bondholders as creditors have a prior ...