Question

Q#03: Briefly describe with examples different forms of securities

Answer 1

A security is a financial instrument, typically any financial asset that can be traded.

Different forms of securities:

a) Equity Securities

Equity almost always refers to stocks and a share of ownership in a company . Equity assures regular income to its holder in the form of dividend with some volatility.

Eg. Shares , Stock

b) Debt Securities

Debt securities differ from equity in the manner as they do not provide ownership right but as against to uncertain dividend income in case of equity, debt holders are given fixed percantage interest income.

Eg. Bank Notes, Bonds, Treasury notes, Debentures

c) Derivatives

Derivative is a kind of security which value depends upon the underlying asset that is then purchased and repaid, with the price, interest, and maturity date all specified at the time of the initial transaction.

Eg. Future, Options. Forward Contract.