This video shows that securities come in various categories like debt and equity. An investor gives debt securities to the issuer as a loan. These variants include bonds, treasury bills, and debentures. In return, the investor receives regular interest payments and the principal amount at maturity.
Equity securities, on the other hand, represent ownership in a company. Some common examples are stocks and shares.
By holding these securities, investors become partial owners of the company. That way, they get a share of the company’s profits, as well as voting rights in certain cases.
As shown in the video, mutual funds are investment vehicles that pool money from multiple sources to invest in a diversified portfolio of securities. Professional fund managers decide what to invest in on behalf of investors. Meanwhile, the securities market plays a crucial role in facilitating the flow of capital.
It provides a platform for individuals, companies, and governments to raise funds by issuing securities. This channel enables those with surplus resources to invest their money and earn a return. At the same time, it allows those who need funds for productive purposes to access capital.
Equity securities represent ownership in a company. Shareholders have the right to vote on corporate decisions and may receive dividends if the company generates profits. Securities attorneys help investors understand legal aspects of their investments.