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Types Of Securities

At any field, a Security is very important, especially In the financial field there are many types of Securities that are a tradable financial asset. it excludes financial instruments other than equities and fixed income instruments. As follow we will discuss types of security.

The Securities Market

In financial this term is express financial market where securities can be bought and sold between subjects of the economy, on the basis of demand and supply. it is have many levels as follow:

  • Primary Market deals with the issue of new securities
  • Secondry Market  refers to the market for any used goods or assets.
  • Over the Counter Market(OTC) contrasted with exchange trading.

There are many main financial instruments that are used with securities market, we will show them as follow:

  • Promissory note is a contract where one party makes an unconditional promise.
  • Certificate of deposit a financial product commonly offered to consumers by banks.
  • Bond provide for other property rights of its holder.
  • shares that divided to comman share and preferred share.

Types Of Securities

Debt Security

it allows a company  to borrow money from investors and repay the loan with interest. they represent a promise to pay back the face amount and interest until the instrument matures. Debt securities are owned and traded by individuals, institutional investors, and even governments. Investors purchase debt securities because they seek a safer return than with riskier equities. there are many examples of debt security:

  • Treasury Bills.
  • Bonds.
  • Commercial Paper.

Equity Security

it measured  by the amount of control of and influence over operating decisions the company purchasing the stock has over the company issuing the stock. it provides steady income as dividends but may fluctuate significantly in their market value with the ups and downs in the economic cycle and the fortunes of the issuing firm. there are many examples of eqity security:

  • Equity Warrants.
  • Convertible Bonds.
  • Preference Shares.

Derivative Security

it is a contract between two or more parties, and its price is determined by fluctuations in the underlying asset. it  gives you the right to buy or sell shares of an existing security at a specific price. The value of contract is determined by changes or fluctuations in the asset where it derives its value from.There are many types of it:

  • Futures.
  • Forwards.
  • Options.
  • Swaps.
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