debt security (redirected from Security (finance))
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issued by a government or corporation
that may be traded. That is, the original buyer
of the debt security effectively lends
the issuer money
in exchange for the security, which gives the holder
the right to receive interest payments
and, at maturity
, the principal
. The holder may, at his/her/its discretion, sell
the security to someone else, who then gains the right to receive interest and principal from the issuer. In general, debt securities are less risky than stocks
; their riskiness relative to each other is determined by the creditworthiness
of the issuer.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A security representing borrowed funds that must be repaid. Examples of debt securities include bonds, certificates of deposit, commercial paper, and debentures.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
Debt securities are interest-paying bonds, notes, bills, or money market instruments that are issued by governments or corporations.
Some debt securities pay a fixed rate of interest over a fixed time period in exchange for the use of the principal. In that case, that principal, or par value, is repaid at maturity.
Some are pass-through securities, with principal and interest repaid over the term of the loan. Still other issues are sold at discount, with interest included in the amount paid at maturity.
US Treasury bills, corporate bonds, commercial paper, and mortgage-backed bonds are all examples of debt securities.