Debt instruments are financial tools that allow individuals or organizations to borrow money. When someone issues a debt instrument, they promise to pay back the borrowed amount, known as the principal, along with interest over a specified period. Common examples of debt instruments include bonds, notes, and debentures. Investors purchase these instruments to earn interest income, while borrowers use them to finance projects or manage cash flow. The terms of the debt, such as interest rates and repayment schedules, are outlined in a contract. This makes debt instruments a crucial part of the financial markets, facilitating borrowing and lending activities.