What are "securities" in finance?

The term "securities" in finance refers to financial instruments that signify either ownership in an entity (equity securities, such as stocks) or a creditor relationship with an entity (debt securities, such as bonds). This can encompass a wide range of instruments, including stocks, bonds, options, and derivatives. When someone invests in securities, they typically gain potential future financial returns based on the performance of the underlying entity or asset.

The definition captures the core nature of securities—providing mechanisms for raising capital and enabling investors to gain a stake in companies or receive fixed income from loans. This is fundamental to understanding how financial markets work and the role of securities in corporate finance and personal investment strategies.