The bank uses your money for a set length of time and in return, agrees to pay back the original money with interest. Debt securities are also an important way for companies and governments to raise money. They frequently sell debt securities called bonds and use the cash for major projects, or just to meet their daily expenses. The government or company usually agrees to pay back the amount of the debt security within a set amount of time. If that period of time is about a year or less, the investment is often referred to as a money market instrument , which is a specific type of fixed-income security.
Examples are short-term bonds and government treasury bills.
If the length of time is more than about a year, the investment is often referred to as a fixed-income investment . Examples are corporate and government bonds and mortgages. Equity securities Equity securities are investments that give the holder part ownership in a company. When a mutual fund buys equity securities, it is buying a piece of a business. The most familiar example is common shares traded on the stock market.