• Government securities are government debt used to finance day-to-day operations, special infrastructure and military projects.
  • They guarantee full repayment of the invested principal at the expiration of the security and often make periodic coupon or interest payments.
  • Government securities are considered risk-free because they are backed by the government that issued them.
  • The trade-off in buying risk-free securities is that they typically pay a lower interest rate than corporate bonds.
  • Investors in government securities will either hold them to maturity or sell them to other investors in the secondary bond market.