Securities

Securities are tradable financial instruments with monetary value. Companies issue securities to raise capital. Securities, which are traded in financial markets such as stock exchanges, help investors diversify portfolios, manage risk, and invest across sectors. They are subject to various regulations and laws to protect investors and maintain the integrity of financial markets.

Securities can represent ownership, debt, or the right to buy/sell financial assets. Examples include stocks (which represent ownership), bonds (which act like loans), and derivatives (whose value depends on assets).

Stocks (Equity Securities): These show ownership in a company. Investors who own stocks have a share in company assets and earnings. They often get voting rights and can receive dividends, making stocks relatively more valuable than other assets.

Bonds (Debt Securities): Governments, municipalities, or corporations issue bonds to raise capital with lower risk. Buying a bond means lending money to the issuer in exchange for periodic interest payments and getting the bond’s face value at maturity.

Derivatives: These are financial contracts tied to underlying assets such as commodities or currencies. Common derivatives include options, futures, and forward contracts.

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