Security

A security is a financial instrument such as a stock or bond.

Expanded Definition

It's an umbrella term and its common definition is plain enough, but possessing securities doesn't mean you have an umbrella to keep your portfolio safe during market storms. Alas.

A security could be a piece of paper (or, more likely, a computer file) showing your investment and expectation of return. The shares a company issues, the bonds a municipality sells, a stake in a mutual fund, a certificate of deposit -- all these are considered securities. The Securities and Exchange Commission provides federal oversight of the exchange of securities, so think about the range of matters it is involved in when thinking about how broad a term 'security' is. The Securities Exchange Act of 1934 includes about 175 words in its definition of the term.

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Related Terms

• Equity
• Stock
• Bond
• Debt

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