In finance, security, is a financial asset that:

  • holds some of monetary value,
  • issued by the company or the government agency,
  • represent an ownership interest and provides:
    • an evidence of the debt,
    • a right to share of the earnings of the issuer,
    • a right in the distribution of the property.

The main feature of any security is a possibility of being traded on financial markets such as stock exchanges.

There are different types of securities:

  • Debt securities (e.g. bonds, debentures, deposits) generally have fixed term, interest rate, maturity and renewal date. Debt securities can be protected by collateral or not.
  • Equity securities (e.g. stocks) are an equity interest in the earnings and assets of a company that issued these securities.
  • Derivatives (e.g. forwards, futures, options, and swaps) are securities, which price depends on one or more underlying assets. So, its value is determined by fluctuations in the underlying asset or assets, such as stocks, bonds, commodities, currencies, interest rates and market indexes.
Olga Slipchenko