Question

What do you know about Security Investment? Explain the different types of security investments with
the help of examples.

Answer 1

Solution :

Security investment: Securities are financial instrument that can be purchased and sold to gain the financial benefit.

There are three major type of security investment:

1. Equity : Equity referes to the ownership in yh company and this is in form of stocks. When an investor buys equity shares then he will benefit from the dividend payment and appreciation in the price of the share. Example - Buy a stock of Apple.

2. Debt : Debt are financial instrument that pays interest. Bonds are the major debt instrument. The government as well as corporate issues bonds. Example - T-Bill, T-notes

3. Derivative: Derivative are the instrument that derives its value from the underlying asset eg. Options .