This lesson provides an in-depth examination of debt instruments, from short-term money market securities to long-term bonds. It covers the characteristics, valuation, and risk profiles of different debt securities, as featured in the University of Bologna and Polytechnic of Santarém curricula .

• Bonds: Bonds are long-term debt instruments where the borrower agrees to pay a specified interest (coupon) and repay the principal (face value) at maturity. The University of Bologna course lists bonds as a key financial instrument . The Polytechnic of Santarém course covers bonds as part of “Equities and Bonds” .

• Bond Valuation and Pricing: The price of a bond is the present value of its expected future cash flows (coupons and principal) discounted at the required rate of return. Bond prices are inversely related to yields. The yield curve—showing yields across maturities—is a key economic indicator. The University of Coimbra course on Calculation and Financial Instruments covers bond loans, including mathematical description, modalities of reimbursement, yields associated with bonds, and the basic model for determining bond value .

• Money Market Securities: Short-term debt instruments with maturities of one year or less, including Treasury bills, commercial paper, certificates of deposit, and repurchase agreements. The University of Coimbra course covers short-term banking loans and commercial paper .

• Types of Bond Issuers: Government bonds (Treasury securities), municipal bonds (issued by state/local governments), and corporate bonds. Each has different risk profiles and tax treatments.

• Credit Risk and Ratings: Credit risk is the risk that the issuer will default on its obligations. Credit rating agencies (S&P, Moody’s, Fitch) assign ratings that reflect the creditworthiness of bond issuers, affecting yields and pricing.