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Finance: What are Securities? 39 Views
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What are securities? Using the word securities is just a fancy way to say investments, for the most part. These particular investments include stock/stock options and bonds.
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Transcript
- 00:00
finance a la shmoop. what are securities? remember Linus? if not ask your parents.;
- 00:09
if you don't remember who the peanuts were, well then Linus was the guy always [man on stage]
- 00:13
carrying the blankie. and always sucking on his thumb .yeah ew gross .the blanket
- 00:18
was his security yeah see where we went with that his blanket was a something
- 00:23
that he relied upon, leaned on, nurtured. it was certainty, it was Bank. that secure
Full Transcript
- 00:30
you see in the beginning of security? well it's not there by accident, so
- 00:35
financially speaking a security secures money. or at least value. when you buy a [100 dollar bill]
- 00:42
security, you give money to someone or something like a corporation. and in
- 00:47
return you get a promise of some value. securities come in two flavors generally
- 00:52
the first is equity ,or ownership. a share of stock is a security entitling you to
- 00:57
whatever percentage ownership and that company the share represents. like if you
- 01:02
bought 500 shares in a company with ten million shares outstanding well that
- 01:06
security represents ownership of five hundred divided by ten million or point [pie chart]
- 01:12
zero zero zero zero five percent of the company.
- 01:17
so that's equity. there's also debt as a security. that's the second thing. like
- 01:21
bonds the bond that Apple offered at four percent yield that pays off in ten
- 01:26
years? yeah that's a bond security. and note [woman sits behind computer]
- 01:28
that securities can carry different guarantees. that is the underlying
- 01:32
promise that the security represents or secures different elements. like a senior
- 01:38
bond security secures that those bonds will be paid off ahead of junior bonds
- 01:44
which will be paid off before say subordinated junior debentures. so you
- 01:49
can see that there are multiple classes and flavors and types of securities all
- 01:54
falling under this tent, which fortunately for everyone doesn't smell
- 01:58
like it's been sucked for four years. good grief. come back next [Linus holds his blankie]
- 02:02
time for another finance lesson a la shmoop and hopefully he'll have washed
- 02:07
this thing by then.
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