Securities are paper assets with financial worth, although the paper is sometimes dispensed with in favour of an electronic record of ownership. It is an extremely broad-ranging term and includes such things as bonds, corporate stocks, even banknotes. Securities are generally grouped into two broad categories: debt securities and equity securities. Debt securities are forms of bond and equity securities are forms of share.

In general, people or institutions wish to hold securities in order to make a profit. This profit can come either through income to which the security may grant a right, for example shares in a company entitle their owner to receive dividends issued by the company; or through a rise in value of the security itself, which is formally known as a capital gain, for example a rise in the price of a company’s shares on the stock market.

In addition, some securities may be desired for reasons other than their pure financial value. Some shares grant voting rights in how a company should be run, for example, or entitle their owner to be given certain kinds of other private information. Some debentures carry membership privileges, allowing their owners to go to certain exclusive places, attend performances and so forth.

In a financial context, a security is a token indicating ownership of a financial asset. There are two main divisions of securities, debt securities and equity securities. Debt securities are such things as bonds. Equity securities are things like shares in a company.

Generally, people or individuals want to own securities because they hope for some rise in their value. If this was not the case, it would be better to own cash. Since securities are not cash, there is always a risk that something will prevent them from being turned into cash at the expected value, for example a company going bankrupt preventing the value of equity securities from being realized. Since there is a certain risk in holding any asset other than cash, it makes sense that those who do so can hope to gain some profit from the arrangement. The hoped-for profit may come in the form of interest payments on the security or in the form of capital gains if the security itself rises in value as a tradable asset.

Securities can also be used as collateral against a debt. When a lender considers lending money to a prospective borrower, naturally the lender must be satisfied that the borrower will be able to repay the debt. If the borrower can offer valuable assets as security, the lender knows that, in the event of default, he will be able to recover some of amount lent.