Security

[si-KYUR-i-tee]

What is the definition of Security?

A security is a transferable certificate of ownership that represents an investment in equity (such as stocks) or debt (such as bonds) and serves as evidence of an interest in or a claim on the assets and earnings of the issuer.

Using Security in an Example

When a company issues stocks or bonds, these instruments are considered securities because they represent the investor's ownership in the company or a creditor relationship with the company and typically come with rights to a portion of the company's assets or earnings.

Using Security in a sentence

During the meeting, the financial advisor explained how diversifying his client's investment portfolio across different types of securities, including stocks and bonds, could help manage risk more effectively.

Related Terms

Surviving Spouse

A person whose spouse has died within the tax year and who may file a joint tax return for that year. Additionally, the surviving spouse can file joint returns for the next two years if they remain unmarried and maintain a household as the principal residence for a dependent child.

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Swap

A financial contract in which two parties agree to exchange streams of payments over a specified period, based on different indices such as interest rates, foreign exchange rates, or equity indices, applied to a notional amount. Swaps typically do not involve the exchange of principal.

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