A is realized through some kind of bonds and

A security is a fungible and negotiable financial instrument that holds some type of monetary value and canbe traded. Generally, a security is a stock, options or a bond. So, it can represent an ownership positionin a publicly-traded corporation through stock or option. It can also mean a creditor relationship with agovernmental body or a corporation by holding bonds. A regulatory body oversees the transactions ofsecurities. As an example, the regulatory role is played by Securities and Exchange Commission in theUnited States.In a broad sense, securities can be of following categories.• Equity Securities: An equity security represents ownership interest in an entity realized in the form ofany kind of shares of capital stock. The holder of equity securities are entitled to have some controlover the entity or corporation commonly through voting rights.• Debt Securities: A Debt security is realized through some kind of bonds and imply a creditor rela-tionship to the issuer entity which may be government body, corporation etc. So, the debt securityhave well stipulated terms of the amount of borrowed money, interest rate and maturity time. Someexample of debt securities include government and corporate bonds, certificates of deposit (CDs) andcollateralized securities. Debt securities are commonly issued for a fixed term with regular repaymentof interest. After the specified fixed term, the debt securities can be redeemed by the issuer.• Hybrid: Hybrid securities combine some characteristics of both. Some examples include equity war-rants, convertible bonds etc.12.1Affect on EconomyTwo participants are involved in a security exchange or transaction: the issuer entity who creates the se-curities for sale and the investor who buy them. By selling securities, government body, municipalities,companies and other commercial enterprises can raise new capital for operations. This can be a good al-ternative to bank loans. Also, the investor with small capital have the opportunity to invest in potentialcommercial enterprises to gain profit.


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