Debt Security

A debt security is a financial arrangement where an individual or institution lends money to a borrower—such as a corporation or government—with the agreement that the borrower will pay back the principal amount along with interest over a specified period. Common examples include bonds and treasury bills. Essentially, it’s a way to generate returns through interest payments, with the borrower committing to repay the debt at maturity. Debt securities are a way for investors to earn income while helping entities fund projects or operations. They are generally considered less risky than stocks, but their safety depends on the issuer’s creditworthiness.