Every type of security, defined in a sentence

Concise descriptions for each term in the 1933 Act that means "a security".

TLDR: The purpose behind the instrument determines the type of security it is. 1933 Securities Act outlines every type of security in the first paragraph. We provide concise descriptions for each term that means "a security".

Eventually, everyone gets to the point where they want to protect their investments. The purpose of registering an investment as a security is to provide the purchaser with an assurance that they're not being defrauded. Also that the instrument being sold does not misrepresent the facts, and to help the purchaser and the government make an informed decision.

On the first page of the 1933 Securities Act, every type of security is outlined.

The term security means…

  • A "note", which is a debt security with a specified repayment period, usually short-term.

  • A "stock", which represents partial ownership in a corporation, allowing shareholders to claim a portion of its assets and earnings.

  • A "treasury stock", which is a company's own stock that has been repurchased and held in the company's treasury.

  • A "security future", which is a standardized contract to buy or sell a specific security at a predetermined price on a specified future date.

  • A "security-based swap", which is a financial contract where two parties exchange cash flows based on underlying securities or indices.

  • A "bond", which is a long-term debt security issued by governments or corporations that pays periodic interest and returns the principal (i.e. amount borrowed) at maturity (i.e. when it's due).

  • A "debenture", which is an unsecured debt instrument backed by the issuer's creditworthiness rather than physical assets.

  • "Evidence of indebtedness", which is any document that indicates a borrower's obligation to repay a debt.

  • A "certificate of interest or participation in any profit-sharing agreement", which represents an investor's ownership stake in a profit-sharing arrangement with a company or venture.

  • A "collateral-trust certificate", which is a debt security backed by collateral, typically in the form of stocks or bonds held in trust.

  • A "preorganization certificate or subscription", which is a commitment to purchase shares in a company prior to its formal organization.

  • A "transferable share", which is a unit of ownership in a corporation that can be easily bought, sold, or transferred between parties.

  • An "investment contract", which is a financial agreement between parties where one invests money with the expectation of profit from the efforts of others.

  • A "voting-trust certificate", which represents the transfer of a shareholder's voting rights to a trustee.

  • A "certificate of deposit for a security", which is a document indicating ownership of a security held by a financial institution.

  • A "fractional undivided interest in oil, gas, or other mineral rights", which is a partial ownership stake in the rights to explore, extract, and sell natural resources.

  • A "put", which is a financial contract that grants the owner the right, but not the obligation, to sell a security at a specific price before a certain date.

  • A "call", which is a similar contract that grants the right to buy a security at a specific price before a certain date.

  • A "straddle", which is an options strategy involving the simultaneous purchase of a put and a call option on the same security with the same expiration date and strike price.

  • An "option", which is a financial contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date.

  • A "privilege", which refers to a special right granted to a particular investor, such as preferred stockholders.

  • A "group or index of securities", which represents a collection of securities, often used to track the performance of a specific market segment. When applied to foreign currency on a national securities exchange, the terms refer to financial contracts that grant rights or privileges to buy or sell foreign currency at specified prices or under specific conditions.

  • A "warrant", which is a financial instrument that grants the holder the right, but not the obligation, to purchase a company's stock at a specific price before a certain date.

  • A "right to subscribe to or purchase", which refers to an investor's entitlement to acquire additional securities, often at a predetermined price, within a specified period. Both terms relate to all securities and financial instruments written describe here.

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