Paper certificates or electronic records that evidence ownership of equity (stocks) or debt obligations (bonds).
What are Securities?
Securities are financial instruments that represent ownership in a company (stocks or shares), a debt owed by a company or government (bonds), or a right to ownership in a company (options or derivatives). Securities can be bought and sold on securities exchanges or over-the-counter markets and are used by individuals, institutions, and governments to raise capital or invest in other entities.
Stocks, also known as equities or shares, represent ownership in a company and provide a share in the company’s profits through dividends and appreciation in stock value. Bonds represent debt owed by a company or government and pay periodic interest to bondholders. Options and derivatives are contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.
Investing in securities can be a way to diversify a portfolio and potentially earn a return on investment, but it also carries risks, such as market fluctuations and the possibility of the issuer defaulting on its debt obligations. It’s important to carefully consider the risks and potential rewards of investing in securities and to consult a financial advisor before making any investment decisions.
