fixed-income security

Fixed-Income Security

An investment that provides a return in the form of fixed periodic payments and eventual return of principle at maturity. Unlike a variable-income security where payments change based on some underlying measure, such as short-term interest rates, fixed-income securities payments are known in advance.

Notes:

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

See also: Annuity, Bonds, Coupon Bond, Fixed Rate Capital Security, GIC, Maturity

---

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.