Debt Securities

Long or short term securities. These are sometimes called fixed income securities. This security is a debt instrument that can be bought or sold between two parties. The basic terms are defined including the amount borrowed, the interest rate and the expiration or maturity date.

Examples of debt securities are corporate bonds, government bonds, municipal bonds and preferred stocks with other forms available. The trading of these securities can be much larger then those of stocks.

The interest rate is usually determined by the judged repayment ability of the borrower. So, if there is a higher chance of default, then the rate of interest will increase.

A debt security is a safer investment then equity securities. Debt securities get their measure of safety because the principal amount is returned to the lender upon the sale of the security, or at the maturity date.

Debt securities are usually grouped by chance of default, the type of issue, and the cycle of income payments. Talk to your financial adviser about what is the best type of investment for your needs.