Security
A tradable financial instrument — stocks, bonds, options, and ETFs are all securities. If it trades on an exchange, it is a security.
A security is a fungible, negotiable financial instrument that holds some type of monetary value. The term is the legal and regulatory umbrella that covers most tradable instruments.
Securities fall into three main categories: equity securities (stocks), debt securities (bonds), and derivative securities (options, futures). ETFs and mutual funds are securities built from baskets of other securities.
Regulators like the SEC in the US use a specific legal test (the Howey Test) to determine whether something qualifies as a security, which affects how it is regulated and traded.
Related Terms
Asset
Anything with economic value that can be owned, traded, or used to generate returns — stocks, bonds, currencies, commodities, crypto.
BeginnerBond
A debt instrument in which the issuer borrows money from the buyer and promises to pay periodic interest plus return the principal at maturity.
BeginnerEquity
Ownership value in an asset after all debts are subtracted. In markets, "equity" usually means stocks.
BeginnerStock
A unit of ownership in a company. Buy stock and you own a slice of the business, with rights to a share of earnings and assets.
Beginner