What is a corporate bond primarily used for?

A corporate bond is primarily used by companies to raise capital for business operations. When a company issues bonds, it is effectively borrowing money from investors with the promise to pay back the principal amount along with interest at a specified future date. This method of raising capital allows companies to finance various initiatives, including expanding operations, investing in new projects, or refinancing existing debt.

The funds generated from corporate bonds can be allocated toward various business needs, such as purchasing equipment, expanding facilities, or funding research and development. This reliance on bonds for operational needs is prevalent because it often allows firms to secure necessary financing without diluting ownership through issuing additional stock.

The other options do not accurately represent the primary use of corporate bonds. For instance, while it is true that a company could potentially use funds from bond issuance for employee salaries, this is a more specific use of funds rather than the overarching purpose of issuing bonds. Similarly, dividends are typically associated with equity investments and are not directly linked to bond usage, while buying out other companies may involve different financing strategies and is not the primary function of corporate bonds.