Common use of Fixed Income Securities Clause in Contracts

Fixed Income Securities. A fixed income security is an investment that provides a return in the form of fixed periodic payments and eventual return of principal at maturity. The day the fixed income investment is to be paid back is called the maturity date. Fixed income investments that mature within a year are often referred to as money market instruments. Trades typically settle in one business day but settlement can be required for the same day depending on the issuer. GICs, Treasury Bills, Bonds, Debentures and Preferred Shares are examples of fixed income securities. Guaranteed Investment Certificates (GICs) - GICs are deposit instruments most commonly available from financial institutions, requiring a minimum investment at a pre-determined rate of interest, for a stated term. They are generally non-redeemable prior to maturity, but there can be exceptions. Treasury Bills - Treasury bills are short-term debt instruments issued by federal, provincial or municipal governments in large denominations and sold at a discount. Bonds & Debentures - A bond evidences the issuer's agreement to pay a specified rate of interest to the investor at intervals over a given period of time and to then repay the principal on the bond's maturity date. Bonds (other than government bonds) are secured with collateral, such as mortgages or future revenues. Debentures are similar to bonds, but are not backed by collateral. Instead, their security depends on the issuer’s creditworthiness.