Financial Securities

Financial Securities are financial instruments that represent an ownership position, a creditor relationship, or rights to ownership as represented by an option. They can be categorized into two main types: Equity securities and debt securities.

Equity securities, such as stocks, represent ownership in a company and provide shareholders with voting rights and dividends. For example, purchasing shares of Apple Inc. gives you a stake in the company.

Debt securities, such as Bonds, represent a loan made by an investor to a borrower, typically corporate or governmental. For instance, when an individual buys a U.S. Treasury bond, they are lending Money to the government in exchange for interest payments.

Cases of financial securities include:

• Common Stock: Represents ownership in a company and entitles the holder to vote at Shareholder meetings.
• Preferred stock: A type of equity security that typically provides fixed dividends and has priority over common stock in the event of Liquidation.
• Corporate bonds: Debt securities issued by companies to raise Capital, offering periodic interest payments to bondholders.
• Municipal bonds: Issued by local governments to finance public projects, often providing tax-exempt interest income.