Securities

A security is a certificate or other financial instrument that has monetary value and can be traded. In another terms it represents any proof of ownership or debt that has been assigned a value and may be sold. For the holder, a security represents an investment as an owner, creditor or rights to ownership on which the person hopes to gain profit. Examples are stocks, bonds and options.

There Are Three Types of Securities

  • Equity securities are shares of a corporation. Stocks of a company can be bought through a broker.
  • Debt securities are loans, called bonds, made to a company or a country.
  • Derivative securities are based upon the value of underlying stocks, bonds or other assets.

 

Equity securities represent a claim on the earnings and assets of a corporation, while debt securities are investments into debt instruments. For example, a stock is an equity security, while a bond is a debt security. … In most cases, debt securities, on the whole, are safer investments than equity securities.

There are three tests to determine when an investment contract is a security. They are:

  1. Is it an investment of money?
  2. Is it in a common enterprise?
  3. Are its profits to come solely from the efforts of others?

A security is a certificate or other financial instrument that has monetary value and can be traded. In another terms it represents any proof of ownership or debt that has been assigned a value and may be sold. For the holder, a security represents an investment as an owner, creditor or rights to ownership on which the person hopes to gain profit. Examples are stocks, bonds and options.

There Are Three Types of Securities

  • Equity securities are shares of a corporation. Stocks of a company can be bought through a broker.
  • Debt securities are loans, called bonds, made to a company or a country.
  • Derivative securities are based upon the value of underlying stocks, bonds or other assets.

 

Equity securities represent a claim on the earnings and assets of a corporation, while debt securities are investments into debt instruments. For example, a stock is an equity security, while a bond is a debt security. … In most cases, debt securities, on the whole, are safer investments than equity securities.

There are three tests to determine when an investment contract is a security. They are:

  1. Is it an investment of money?
  2. Is it in a common enterprise?
  3. Are its profits to come solely from the efforts of others?