Security

A security is a financial instrument that represents some kind of monetary value and can be traded. The company or other entity issuing the security is called the issuer. Securities are generally listed on exchanges, but they can also be bought and sold in the  OTC market.

Securities are generally classified into the following categories:

1. Debt Securities -  Debt securities are interest paying bonds, bank notes, debentures which are issued with a promise of repayment on a certain date at a certain interest rate.

2. Equity Securities - Equities represent ownership in a corporation, such as stock.

3. Hybrid Securities -  It combines the characteristics of both debt and equity securities. Some of the hybrid securities are preferred shares, convertible bonds (bonds that can be exchanged for shares of a company), and equity warrants (options issued by the company that allows the holder to purchase a specific number of stocks at a specified price within a specified time period).