Build a Better Process

Debt Security Definition and Quiz

Buyers of debt securities buy the obligation to be repaid principal plus interest. Buyers of equity securities buy the opportunity for growth. That's where the differences begin.
  1. Define - Define debt securities.
  2. Context - Use debt security in a sentence.
  3. Quiz - Test yourself.
face pic by Paul Alan Davis, CFA
Updated: February 17, 2021
There are many types of debt securities, from notes to bonds. Learn more below.

Outline Back Tip Next

/ factorpad.com / fin / glossary / debt-security.html

An ad-free and cookie-free website.

Debt Security


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?


Many terms have 4-5 minute videos showing a derivation and explanation. If this term had one, it would appear here.

Videos can also be accessed from our YouTube Channel.

Video Script

If this term had a video, the script would be here.


Click box for answer.

Debt securities suffer capital losses when interest rates ____. | Fall or Rise?


Which of the following is not a debt security? | Agency, Muni, Note, Preferred, Zero-Coupon?

Preferred. Also known as a Preferred Equity or Preferred Stock.

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.

What's Next?

Subscribe and follow for reminders and to show your support.

Outline Back Tip Next

/ factorpad.com / fin / glossary / debt-security.html

debt securities
investment bonds
investment notes
fixed income investments
fixed income securities
fixed income funds
fixed income products
fixed income bonds
fixed income market
fixed income assets
financial leverage
interest-bearing investment
interest rate
coupon payments
financial modeling
fixed income assets
debt investments
debt instruments
bond investing
investment opportunities
income investments

A newly-updated free resource. Connect and refer a friend today.