LeoGlossary: Debt

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The borrowing of something, usually money, from one party by another. Governments, companies, and individuals utilize this.

Debt allows for large purchases which normally could not be made under normal circumstances. The arrangement is such that the borrowing party agrees to pay back the money over a certain period of time, usually with interest.

Major corporations and governments can turn to the debt markets to help finance their purchases. This is done through the sale of securities called bonds.

Over indebtedness can cause financial instability to individuals, companies as well as economies.


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