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Simple English definitions for legal terms
debt instrument
Read a random definition: Consumer Product Safety Commission
A quick definition of debt instrument:
A debt instrument is a written agreement that promises to pay back money that has been borrowed. This can include things like a note, bill, bond, or commercial paper. Essentially, it's a way for someone to borrow money and promise to pay it back in the future.
A more thorough explanation:
A debt instrument is a written agreement that promises to repay a debt. This can include:
- Promissory notes
- Bills
- Bonds
- Commercial paper
For example, if you borrow money from a friend and write a promissory note stating that you will repay the loan within a certain timeframe, that note is a debt instrument. Similarly, if a company issues bonds to raise money, those bonds are debt instruments.
Debt instruments are important because they allow individuals and organizations to borrow money and raise capital. They also provide a way for investors to earn a return on their investment by lending money to others.