1.1.5 Financial Assets (Securities)

This topic describes the Financial Assets of Securities.

Financial assets constitute an abstract but verifiable financial stake that may be represented through a paper document or a computer system but does not disappear just because something happens to the piece of paper (or the computer) on which it was recorded.

Financial assets can be broadly classified into Equities / Stocks, fixed income securities, and derivatives. The financial stakes represented by securities are stakes in some business, government, or other legal entity.

• If the security is equity/stock, then the investor’s role is ownership (together with other investing shareholders, if any).
• If the security is a bond, then the investor is a creditor and the other entity can be corporate or government.
• If the security is an option, then the investor has certain well-defined rights and the other entity has corresponding obligations.