Valuing debt securities, Financial Management

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Valuing Debt Securities

Securities which promise to pay its investors a stated rate of interest and return principal amount at the maturity date are known as debt securities.  Maturity period is generally more than one year which is the key differentiating factor between them and money market securities. Debt securities are generally secured. Debt securities differ according to their provisions for payment of interest and principal, assets pledged as a security and other technical aspects. In the case of bankruptcy of corporation, law requires that debt holders should be paid off before equity investors.

 


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