Security - Financial definition
Concise definition of the term security
In finance, a security is a tradable financial asset, such as stocks, bonds, or options, that represents an ownership position, a creditor relationship, or rights to ownership.
Comprehensive definition of the term security
Securities are fundamental components of the financial markets, allowing companies to raise capital and investors to buy, sell, and trade ownership or debt instruments. For example, stocks give shareholders equity in a company, while bonds provide lenders with interest payments and principal repayment over time.
These instruments are traded on various platforms, including stock exchanges and over-the-counter markets, facilitating liquidity and price discovery. Market practices, such as underwriting and regulatory oversight by entities like the Securities and Exchange Commission (SEC) in the U.S., ensure the integrity and transparency of security transactions, helping to protect investors and maintain orderly markets.