Distressed Security

Business, Legal & Accounting Glossary

Definition: Distressed Security



Full Definition of Distressed Security


A distressed security is a security belonging to a company that is under financial distress, such as bankruptcy, restructuring, liquidation, etc. in order to be able to pay debts (avoid insolvency). One strategy for dealing with a distressed security is to purchase the distressed security at a discount price and hold onto it until it has appreciated again in value. This investment strategy is considered risky because there is a chance that the company of the distressed security will not recover at all. Still, the potential profit from a distressed security makes it appealing to more aggressive investors. These profits may result from the market’s lack of understanding of the true value of the distressed security. A distressed security may also be known as a distressed asset.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/distressed-security/
Modern Language Association (MLA):
Distressed Security. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 05, 2020 https://payrollheaven.com/define/distressed-security/.
Chicago Manual of Style (CMS):
Distressed Security. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/distressed-security/ (accessed: July 05, 2020).
American Psychological Association (APA):
Distressed Security. PayrollHeaven.com. Retrieved July 05, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/distressed-security/

Definition Sources


Definitions for Distressed Security are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020 | 1 Views.