A security is a tradable
financial asset. The term commonly refers to any form of
financial instrument
Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form ...
, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any form of financial instrument, even though the underlying legal and regulatory regime may not have such a broad definition. In some jurisdictions the term specifically excludes financial instruments other than
equities and
Fixed income
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the pri ...
instruments. In some jurisdictions it includes some instruments that are close to equities and fixed income, e.g.,
equity warrants.
Securities may be represented by a certificate or, more typically, they may be "non-certificated", that is in electronic (
dematerialized) or "
book entry
Book entry is a system of tracking ownership of securities where no certificate
Certificate may refer to:
* Birth certificate
* Marriage certificate
* Death certificate
* Gift certificate
* Certificate of authenticity, a document or seal certify ...
only" form. Certificates may be ''bearer'', meaning they entitle the holder to rights under the security merely by holding the security, or ''registered'', meaning they entitle the holder to rights only if they appear on a security register maintained by the issuer or an intermediary. They include shares of corporate
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
or
mutual fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV ...
s,
bonds issued by corporations or governmental agencies,
stock options or other options, limited partnership units, and various other formal investment instruments that are negotiable and