Online Or Traditional Investing: Some Basic Information About Securities

Oct 24, 09 Online Or Traditional Investing: Some Basic Information About Securities
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by Michele Perdue

Before we get into different types of securities it is important to know the very basic definition of investment securities. Investment securities are a form of certificate or document that shows that you have invested in a company, business, or a government entity.  The two key types of securities are equity securities and debt securities.

These are some of the basic securities types.

1.)  Bond

This follows in the debt security type wherein the issues of the bond pay interest at a predetermined rate.  Bonds are issues by companies, public authorities, governments, and at times credit institutions.  The method used for bond issuing is known as underwriting.  The issuer keeps paying interest at regular intervals and pays the principal amount at a later date.  Some of the different types of bonds are treasury bonds, bearer and registered bonds, participation bonds, and convertible bonds.

2.)  Derivatives

These are indirect financial instruments that are depended on by direct securities such as bonds, equities.  They are also known as hedging instruments.  Some of the different types of derivatives are futures swaps, index options, covered and uncovered calls.

3.)  Equities

These are the most common type of investment securities.  They are in the form of stock or shares that gives the holder ownership in a company.  The public has the option of becoming a shareholder in a large company.  Some of the different options are common stock, preferred stock dividends, book value, par value, and depository receipts.

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