What are Securities?
Within the realm of the open market, which is also known as
the stock market, financial instruments undergo a wide range of activity, which
involves their respective purchase and trade; due to the fact that both stocks
and Securities do not share in the innate valuation designated to money or hard
currency, a primary facet inherent within both stocks and Securities is the
potential for fluctuation with regard to their respective valuation.
Securities vs. Stocks
Stocks are a classification of particular types of
securities; yet, while both stocks and securities may increase in value, they
also retain the potential to decrease in value; the respective growth innate in
both stocks, as well as securities are subject to variation taking place in a
variety of natures – these developmental natures range from drastic and
spontaneous to gradual and minimal. However, the similarities in the behavior
and trends within both stocks and securities do not substantiate for a uniform
interchangeability; the following are the primary differences that exist
between stocks and securities:
Stocks
Stocks are defined as are individual shares of a
publically-traded company available for purchase on the commercial investment
market. Stocks, which are available for financial exchange in a ‘unit-by-unit’
basis, maybe amassed through purchase, sold, collected, traded, transferred,
and exchanged. Any company designated to be traded on a public basis is
required to offer the general investing public the opportunity to purchase
shares.
Securities
As previously mentioned, Securities are financial
instruments that serve as investments whose respective terms are considered to
be longer than stocks; while stocks may be more apt to undergo drastic
fluctuation, securities are typically considered to retain a more stable nature
– as a result, securities are widely considered to be both assets and
investments, rather than simply investments. The following are some example of
the most common varieties of securities currently in circulation:
A bond is a classified as a type of security that
acts as a loan given by an individual investor to a larger company or
institution;in the event that an individual purchases a bond from a specific
company or institution, the purchase undertaken is considered to exist in the
form of a loan – as the bond matures, the latent interest grows.
A Bank Note is a type of security that is
granted from a Bank or varying type of financial institution accredited by the
SEC; a bank note retains dual valuation, as do a variety of securities – while
a bank not may be redeemed for its inherent value, it may also be kept with the
hopes of interest accrued in tandem with the growth of that bank.
Debt Securities are types of securities that are
available for public purchase of the commercial market; however, in contrast to
bonds, debt securities can be issued on an interchangeable basis with regard to
individual purchaser and cooperate purchaser – as per the nature of a multitude
of securities, the prospect of accruing interest substantiates the inherent
value existing within individual debt securities.
