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What are Securities?
Before the electronic era, if you invest in a security, you were issued a paper certificate or note of some kind, which served as documentation of your investment and outlined the terms of the investment. These paper certificates were called securities, and they were proof of your investment.
Paper securities could be bought and sold, just as we buy and sell stocks or bonds or shares of mutual funds today.
Today, the term securities refers to just about any negotiable financial instrument, such as a stock, bond, options contract, or shares of mutual funds.
Consider the term “security”, or “securities”, interchangeable with the word “investment”, and the term “securities market” interchangeable with the work “capital markets” or simply “the market”.
Securities fall into three broad categories:
- Debt Securities, also called fixed income securities
- Equity Securities, which refers to common stocks
- Derivative Securities, which refers to various forms of options contracts
Before the electronic era, if you invest in a security, you were issued a paper certificate or note of some kind, which served as documentation of your investment and outlined the terms of the investment. These paper certificates were called securities, and they were proof of your investment.
Paper securities could be bought and sold, just as we buy and sell stocks or bonds or shares of mutual funds today.
Today, the term securities refers to just about any negotiable financial instrument, such as a stock, bond, options contract, or shares of mutual funds.
Consider the term “security”, or “securities”, interchangeable with the word “investment”, and the term “securities market” interchangeable with the work “capital markets” or simply “the market”.
Securities fall into three broad categories:
- Debt Securities, also called fixed income securities
- Equity Securities, which refers to common stocks
- Derivative Securities, which refers to various forms of options contracts