Desde Investopedia

TERM OF THE DAY

Debt Security Debt security refers to a debt instrument, such as a government bond, corporate bond, certificate of deposit (CD), municipal bond or preferred stock, that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate, and maturity and renewal date. It also includes collateralized securities, such as collateralized debt obligations (CDOs), collateralized mortgage obligations (CMOs), mortgage-backed securities issued by the Government National Mortgage Association (GNMAs) and zero-coupon securities.

Breaking it Down: The interest rate on a debt security is largely determined by the perceived repayment ability of the borrower; higher risks of payment default almost always... Read More