Fixed-Income Security

Fixed-Income Security

A security with a guaranteed return. Common examples include bonds, which pay periodic coupons representing a certain interest rate, and preferred stocks, which are legally required to receive a specified dividend at certain times. Typically, fixed-income securities offer lower risk and lower returns than common stock and similar investment vehicles.

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fixed-income security

A security, such as a bond or preferred stock, that pays a constant income each period. Price changes in a fixed-income security are caused primarily by changes in long-term interest rates.

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Fixed-Income Security

What Does Fixed-Income Security Mean?

An investment that provides income in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, in which payments change on the basis of an underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance and do not change.

Investopedia explains Fixed-Income Security

An example of a fixed-income security would be a 5% fixed-rate government bond in which a $1,000 investment would result in an annual $50 payment until maturity, at which time the investor would receive the $1,000 back. Generally, these types of assets offer a lower return on investment because they guarantee a fixed rate of income.

Related Terms:
• Annuity
• Bond
• Coupon
• Interest rate
• Yield