A debt security is evidence of a debt. It is sold to an investor with the promise that it will be paid back with interest at the end of a specified period. The debt's issuer—a corporation or a unit of government—uses the proceeds of its sales to finance various projects.
Some debts last as little as one day. Others last as long as fifty years.
Some are secured by collateral such as revenue or physical assets.
Some are unsecured and are backed only by the creditworthiness of the company or government unit.
All debt securities are issued with a fixed face amount (par). However, the issuer often sells them at a discount (below par). This gives the investor extra incentive to purchase the issue. For example, a debt can be given a value of $500 but be sold for only $450.
This tutorial provides a general look at the four types of debt securities:
Corporate Bonds
Features of Corporate Bonds
Types of Corporate Bonds
Municipal Bonds
U.S. Government Securities
Marketable Securities
The Non-Marketable Treasury Securities
Money Market Securities
Money Market Investments
Debt Securities are Investments in Loans
Course Topics:
Bond Basics | Types of Bonds | Bond Features Buying, Selling and Trading Bonds