In finance, a security is a tradeable financial instrument that holds monetary value and can be bought and sold. Securities can be broadly categorized into three types: equity securities, debt securities, and hybrid securities.

• Equity Securities: These represent ownership interest held by shareholders in an entity, realized in the form of shares of capital stock, which includes shares of both common and preferred stock. When you buy an equity security, you own a piece of the company and have a stake in how the business performs.

• Debt Securities: These represent money you’ve essentially loaned toward a project or entity. You’re entitled to regular interest and principal payments. Debt securities might include bonds, certificates of deposit (CDs), or other collateralized securities.

• Hybrid Securities: These combine aspects of both equity and debt securities.

Securities can be bought and sold on securities markets, which are regulated by organizations such as the Securities and Exchange Commission (SEC) in the United States. Securities markets allow companies to raise new capital by selling stocks, bonds, or other securities.

Its important to note that not all investments are considered securities. For example, currency, a check, a bank letter of credit, and an interest in a deposit account with a bank or a savings and loan association are not securities.

Overall, securities are a common investment contract and a means by which municipalities, companies, and other commercial enterprises can raise new capital.