Also known as “bonds” these are IOUs issued by companies and governments.

They carry a fixed coupon so the income return to an investor is known in advance as is the final redemption date and the value of the bond at that redemption date (its “face”, “par” or “nominal” value). From an issuer’s point of view they can offer access to a relatively cheap source of finance. For an investor fixed income securities can be a way to secure a relatively predictable income stream and diversify a portfolio.