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Company BondsThere are two general ways to invest in a company. You can by stock in a company or you can purchase company bonds.

By buying stock in a company you become a partial owner of that company. This entitles you to any dividends that may be paid and in general the more successful the company is the more your shares are worth.

By buying bonds related to a specific company you are basically loaning that company money. That money is to be paid back at a specified rate of interest for a specified amount of time. You take on the roll of the bank in that you give the company a loan and now they must pay you back with interest. Should the company go out of business bond holders are more likely to get their money back than shareholders through the bankruptcy process. You will unlikely get all of your money back but you may get some of it. For that reasons companies that are considered riskier must pay a higher rate of interest to their bond holders.

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Q: What does it mean to own a bond in a company?
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