Primitive security

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Primitive security

An instrument such as a stock or bond for which payments depend only on the financial status of the issuer.

Primitive Security

An investment vehicle for which dividends, coupons, or other payments depend on the financial health of the issuer. For example, an unsecured bond may be an example of a primitive security as coupons may only be paid if the issuer has the cash flow to pay them. Primitive securities have the potential to have higher risk than other securities, especially those coming from new or relatively unknown issuers.
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