What is a fixed-income security?
A. A fixed-income security is a type of security that pays a fixed rate of return. Fixed-income securities such as corporate, government or municipal bonds usually pay a fixed interest rate until they mature. Preferred securities, however, pay fixed dividends. Bonds are considered to be debt securities, as they represent an investor’s loan to an issuer. Preferred securities are considered to be equities but are similar to bonds in that they generally respond to changes in interest rates.
