The holder of a debt security is owed a debt by the issuer and
is entitled to the payment of principal and interest, together
with other personal rights under the terms of the issue, such
as the right to receive certain information. Debt securities
are generally issued for a fixed term and redeemable by the issuer
at the end of that term.
Treasury bonds are medium or long term debt securities issued
by sovereign governments or their agencies. Typically they carry
a lower rate of interest than corporate bonds. In addition to serving
as a source of finance for governments, treasuries are used to
manage the money supply in the money market operations of central
Money market instruments are short term debt
instruments, such as certificates of deposit, commercial
paper and certain
of exchange. They are highly liquid and are sometimes referred
to as "near cash".
Eurosecurities are securities issued internationally outside their
domestic market. They include eurobonds and euronotes. Eurobonds
are characteristically underwritten, and not secured, and interest
is paid gross. A euronote may take the form of euro-commercial
paper (ECP) or euro-certificates of deposit.
> Mortgage Backed Securities
An equity is an ordinary share in a company. The holder of an equity
is a shareholder, owning a share, or fractional part of the issuer.
Hybrid securities combine some of the characteristics of both debt
and equity securities.
Preference shares form an intermediate class of security between
equities and debt. If the issuer is liquidated, they carry the
right to receive interest and/or a return of capital in priority
to ordinary shareholders.
Convertibles are bonds which can be converted, at the election
of the bondholder, into another sort of security such as equities.