3.1.2 Payment Term and Interest Rate

3.1.2 Payment Term and Interest Rate

The second major distinction comprises the payment term and interest rate. Debt can be short term (maturing within 1 to 5 years of issuance) or long term, with long term divided from investor’s perspective between “intermediate” (6 to 15 years) and “long dated” (maturities or a serial issue and term bonds typically having maturities of more than 15 years from issuance). The accompanying interest rates are either fixed or variable. Examples include long-term, fixed-rate debt obligations and variable-rate demand bonds.