Remember Linus from Peanuts? He was the guy always carrying the blankie. And always sucking on his thumb. Yeah. Ooh. Gross. The blanket was his…security. Yeah…ahhh, see how we made that connection? His blanket was something that he relied upon. Leaned on. Nurtured. It was certainty.
That “secur” you see in the beginning of “security” isn’t there by accident. Financially speaking, a security...secures money. Or at least value. When you buy a security, you give money to someone or something and, in return, you get a promise of some value.
Securities come in two flavors, generally: equity or ownership. A share of stock is a security entitling you to whatever percentage ownership in that company the share represents. Like...if you bought 500 shares in a company with 10 million shares outstanding, that security represents ownership of 500 divided by 10 million, or .00005 percent.
So that’s equity. There’s also debt as a security. Like bonds. The bond that Apple offered at 4 percent yield that pays off in 10 years? That’s a bond security. And note that securities can carry different guarantees. That is, the underlying promise is that the security represents, or secures, different elements. Like…a senior bond security secures that those bonds will be paid off ahead of junior bonds, which will be paid off before, say, subordinated junior debentures.
So you can see that there are multiple classes and flavors and types of securities all falling under this tent…which, fortunately for everyone, doesn't smell like it's been sucked on.
Good grief. Come back for another finance lesson a la Shmoop, and hopefully Linus will have washed his thing (er, his blanket) by then.
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Finance: What are Securities?39 Views
finance a la shmoop. what are securities? remember Linus? if not ask your parents.;
if you don't remember who the peanuts were, well then Linus was the guy always [man on stage]
carrying the blankie. and always sucking on his thumb .yeah ew gross .the blanket
was his security yeah see where we went with that his blanket was a something
that he relied upon, leaned on, nurtured. it was certainty, it was Bank. that secure
you see in the beginning of security? well it's not there by accident, so
financially speaking a security secures money. or at least value. when you buy a [100 dollar bill]
security, you give money to someone or something like a corporation. and in
return you get a promise of some value. securities come in two flavors generally
the first is equity ,or ownership. a share of stock is a security entitling you to
whatever percentage ownership and that company the share represents. like if you
bought 500 shares in a company with ten million shares outstanding well that
security represents ownership of five hundred divided by ten million or point [pie chart]
zero zero zero zero five percent of the company.
so that's equity. there's also debt as a security. that's the second thing. like
bonds the bond that Apple offered at four percent yield that pays off in ten
years? yeah that's a bond security. and note [woman sits behind computer]
that securities can carry different guarantees. that is the underlying
promise that the security represents or secures different elements. like a senior
bond security secures that those bonds will be paid off ahead of junior bonds
which will be paid off before say subordinated junior debentures. so you
can see that there are multiple classes and flavors and types of securities all
falling under this tent, which fortunately for everyone doesn't smell
like it's been sucked for four years. good grief. come back next [Linus holds his blankie]
time for another finance lesson a la shmoop and hopefully he'll have washed
this thing by then.