A corporate bond creates a debtor-creditor relationship between the corporation and the holder of the security.

Question

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A corporate bond is a form of debt security issued by a company to raise money. By purchasing a corporate bond, the investor becomes a creditor of the company and is entitled to receive regular interest payments and the return of principal at maturity. Therefore, a corporate bond does create a debtor-creditor relationship between the corporation and the bondholder.

A Corporate Bond Creates a Debtor-Creditor Relationship Between the Corporation