HDMG - Government Securities Lesson

Government Securities

The term "government securities" encompasses any debt issued by a government entity whether federal, state, or local, and any agencies of these governments. Government securities are considered among the safest investments because they are backed by the taxing power of the government.

Types of Government Securities

Government securities vary in how interest is paid, maturity dates, as well as how they are taxed. Click on the tabs below to find out more.

Debt Securities and Markets

Both stocks (equity securities) and bonds (debt securities) are sold on both primary and secondary markets. In the primary market, the issuing entity sells their stock or bond initially. In the secondary market, stock and bond owners buy and sell their securities. How a bond is priced in the secondary market depends largely on the rate of interest on the bond and the prevailing rate of interest in the market at the time of sale. View the presentation below to better understand how bonds work. Make sure your speakers are turned up to hear the audio.

Self-Assessment

Do you remember which government securities paid interest and which were sold at a discount? Try this activity to see!

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