|
A debt security is a written agreement to repay a loan, usually with interest, within a given time frame. A debt security may also be referred to as a debt instrument. Issuing a debt security is one way that governments, corporations and even individuals raise capital. A debt security is generally backed by some form of collateral or, in the case of a government bond, a debt security is guaranteed by the taxing power of the government. Common examples of a debt security include government and corporate bonds, certificates of deposit, loan notes, and mortgages. In many cases a debt security is rated by a third party and may be sold or traded on the open market. When a debt security is traded in the secondary market it may trade at par value, below par value or above par value, depending on market forces. |
