Accounting for Investments, Volume 2: Fixed Income Securities and Interest Rate Derivatives—A Practitioner's Guide
by R. Venkata Subramani
FIXED INCOME SECURITIES IN GENERAL
Fixed income refers to any type of investment that yields a regular (or fixed) return. A bond is a debt security. When an investor purchases a bond, the investor is actually lending money to the issuer of the bond. The issuer could be a government, municipality, corporation, federal agency or other entity. In return for the money lent, the issuer provides the investor with a certificate in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due. This certificate is known as the “bond.”
Among the types of bonds available for investment are: U.S. government securities; municipal bonds; corporate bonds; mortgage- and asset-backed securities; federal agency securities; and foreign government bonds.
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