Debt Security Definition and Quiz

1. Define - Define debt securities.
2. Context - Use debt security in a sentence.
3. Quiz - Test yourself.

by Paul Alan Davis, CFA

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Debt Security

Beginner

A Debt Security is an investment in the debt or leverage side of a business or government entity. In the event of a bankruptcy, debt securities are given higher priority than equity securities.

The owner of a debt security is interested in a fixed and stable return in the form of periodic interest payment. Typically debt securities mature and at that time the investor is returned a final principal payment.

Synonyms: bond, note, fixed-income

Debt security prices are sensitive to prevailing interest rates and decrease in value when interest rates rise because alternative assets return a higher fixed payment. The opposite is true when interest rates fall.

In a Sentence

Liz:  In this deck, must I define a debt security? These days it's like, don't sue me.
Sue:  To the former, yes, and to the latter, huh?

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Video Script

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Quiz

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Questions or Comments?

Still unclear on debt securities? Try out the course Quant 101.

Related Terms

Our trained humans found other terms in the category investment vehicles you may find helpful.

• Common Stock
• Equity Security

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