Financial Securities are negotiable instruments which represent financial value. Securities may be classified into few debt and equity securities like bonds and common stocks. The company or an organization issuing security is called the issuer. There may be a regulatory structure for security trading in many nations and there may also exist private investment pools and these may have some characteristics of securities. Generally, certificates or electronic book entry interest represent securities. There remains further segregation for these certificates. The certificates can be bearer or registered.
As per investorwords.com securities may be defined as “Property which is pledged as collateral for a loan” http://www.investorwords.com/4446/security.html . Some of the securities are shares of mutual funds and corporate stocks. Bonds issued by governmental agencies, stock options, limited partnership units and various other form of investment instruments are negotiable.
Securities may be categorized according to the following categories:
Currency of the traded denominations
Issuer
Rights of ownership
Term to maturity and the whole tenure
Income payments
Degree of liquidity
Tax related factors
The two major security markets are as mentioned below:
Primary market: In the primary market, the currency for the securities is accepted by the issuer of securities from the investors.
Secondary market: In the secondary market, the money is transferred from one investor to another.