Any financial asset that can be traded
Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.
What is a Security?
A security is a financial instrument, typically any financial asset that can be traded. The nature of what can and can’t be called a security generally depends on the jurisdiction in which the assets are being traded.
In the United States, the term broadly covers all traded financial assets and breaks such assets down into three primary categories:
- Equity securities – which includes stocks
- Debt securities – which includes bonds and banknotes
- Derivatives – which includes options and futures
Types of Securities
1. Equity securities
Equity almost always refers to stocks and a share of ownership in a company (which is possessed by the shareholder). Equity securities usually generate regular earnings for shareholders in the form of dividends. An equity security does, however, rise and fall in value in accord with the financial markets and the company’s fortunes.
2. Debt securities
Debt securities differ from equity securities in an important way; they involve borrowed money and the selling of a security. They are issued by an individual, company, or government and sold to another party for a certain amount, with a promise of repayment plus interest. They include a fixed amount (that must be repaid), a specified rate of interest, and a maturity date (the date when the total amount of the security must be paid by).
Bonds, bank notes (or promissory notes), and Treasury notes are all examples of debt securities. They all are agreements made between two parties for an amount to be borrowed and paid back – with interest – at a previously-established time.
3. Derivatives
Derivatives are a slightly different type of security because their value is based on an underlying asset that is then purchased and repaid, with the price, interest, and maturity date all specified at the time of the initial transaction.
The individual selling the derivative doesn’t need to own the underlying asset outright. The seller can simply pay the buyer back with enough cash to purchase the underlying asset or by offering another derivative that satisfies the debt owed on the first.
A derivative often derives its value from commodities such as gas or precious metals such as gold and silver. Currencies are another underlying asset a derivative can be structured on, as well as interest rates, Treasury notes, bonds, and stocks.
Derivatives are most often traded by hedge funds to offset risk from other investments. As mentioned above, they don’t require the seller to own the underlying asset and may only require a relatively small down payment, which makes them favorable because they are easier to trade.
Related Readings
Thank you for reading CFI’s guide on Security. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below:
FAQs
1. the state of being or feeling secure; freedom from fear, anxiety, danger, doubt, etc.; state or sense of safety or certainty. 2. something that gives or assures safety, tranquillity, certainty, etc.; protection; safeguard.
What are the three types of security? ›
Comprehensive security is the key to any organization. There are three categories of security controls that businesses must consider: management security, operational security, and physical security.
How do I change my Google security settings? ›
To access your Google Account security settings, go to myaccount.google.com. In the navigation panel, tap Security.
What is the correct definition of security? ›
: something that secures : protection. b(1) : measures taken to guard against espionage or sabotage, crime, attack, or escape. (2) : an organization or department whose task is security.
What is the deep meaning of security? ›
the state of freedom from fear or danger. protection, shelter. the condition of being protected. indemnity, insurance. protection against future loss.
What is security in a person? ›
Security of the person is a right protected by the Charter of Rights and Freedoms. It means that you have the right to the health and privacy of your body, including the physical integrity of your body.
What are the 3 C's in security? ›
The 3Cs of Best Security: Comprehensive, Consolidated, and Collaborative - Check Point Blog.
What are the 4 fundamentals of security? ›
Fundamental Principles of Information Security
There are four main principles of information security: confidentiality, integrity, availability, and non-repudiation.
What are the 4 basic of security? ›
There are four basic security principles: access, authentication, authorization, and accounting. Use physical and software controls to protect your hardware or data from intrusion. For hardware, access limits usually mean physical access limits. For software, access limits usually mean both physical and virtual means.
Who can see my Google Account? ›
How can I hide information?
- On your Android phone or tablet, open your Settings.
- Tap Google Manage your Google Account. Personal info.
- Under "Choose what others see," tap Go to About me.
- Below a type of info, you can choose who currently sees this info.
- Choose one of the following: To make the info private, tap Only you.
Never reveal your passwords to others.
Your login credentials protect information as valuable as the money in your bank account. Nobody needs to know them but you—not even the IT department. If someone is asking for your password, it's a scam.
How do I stop someone from accessing my Google Account? ›
To prevent access to your Google Account, visit Your Devices page and sign out of any sessions on the affected device. Learn how to manage your sessions and signed-in devices.
What is poor security? ›
Poor security on a property can include many things, from inadequate lighting to safety fencing around a pool to security guards at an event. It can cause unnecessary incidents to occur, which can lead to injuries and damages to visitors or patrons on a property.
What is access controlling? ›
Access Control Definition
Access control is a data security process that enables organizations to manage who is authorized to access corporate data and resources. Secure access control uses policies that verify users are who they claim to be and ensures appropriate control access levels are granted to users.
What happens when a security is called? ›
Many bonds issued today are “callable,” which means they can be redeemed by the issuer before the listed maturity date. If that happens, the issuer would pay you the call price and any accrued interest, but they wouldn't make any future interest payments.
What are the four types of security? ›
What are the 4 Types of Security?
- Physical Security. Physical security involves measures taken to protect tangible assets, infrastructure, and personnel from unauthorized access, theft, vandalism, or harm. ...
- Cybersecurity. ...
- Information Security. ...
- Operational Security.
It is derived from Latin securus, meaning freedom from anxiety: se (without) + cura (care, anxiety).
What is security in our life? ›
Security – the sense of being safe physically, emotionally, and environmentally – impacts wellbeing in many ways, including physical health, emotional wellbeing, and how we manage stress. In addition, when you feel safe, you can focus on higher pursuits, such as your calling or sense of purpose in life.
What is the meaning of security of person? ›
1) Everyone has the right to freedom and security of the person, which includes the right (a) not to be deprived of freedom arbitrarily or without just cause; (b) not to be detained without trial; (c) to be free from all forms of violence from either public or private sources; (d) not to be tortured in any way; and.
