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Subject: What are securities?


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Date Posted: 03:45:32 07/05/05 Tue

What are securities?


Securities are stocks and bonds. A stock represents a share, or percentage, in a corporation’s profits and assets. By purchasing stock an investor is buying a percentage of ownership in a company. If the corporation (only corporations issue stocks) makes higher profits, the value of its securities will increase. The shares of the individual investor will gain in worth. When a corporation loses money, however, the value of the investor’s shares will decrease. Bonds may be issued by corporations, states, the federal government, and other entities. A bond represents monies loaned to a corporation or issuer. Bonds must be repaid for their full value and usually bring in a specified amount of interest. Holding a bond does not give an investor any ownership in the entity or company, but it will be indebted to him.

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