Securities are financial assets that can be bought, sold, or traded in financial markets. They include equity securities such as stocks, which represent ownership interest in a company, and debt securities like bonds, which represent a loan made by the investor to the issuer. Other types of securities include derivatives and hybrid securities, which derive value from underlying assets or combine equity and debt features, respectively.
For example, investing in Apple shares is considered buying an equity security, while investing in U.S. treasury bonds involves purchasing debt securities. Securities are purchased by investors to potentially earn returns through dividends or interest income, or capital gains when sold at a higher price.
Securities are regulated by government bodies to ensure transparency and protect investors in the marketplace. Understanding securities is crucial for businesses when needing to raise capital, and is a core component of modern financial markets.