Ever picked up the newspaper and read sentences like ‘Surging tech stocks’ or ‘bond market liquidity seen as more fragile’, and wondered what the heck it all means? Well, wonder no more, because this article and the following upcoming chapters will lead you to financial literacy, starting with securities.
1. What are securities?
These are items bought and sold on the financial markets. To be a security, it must be:
2. Why do people buy and sell securities?
♦ To Raise Capital
For business to commence or continue, they need money. Or in other words, capital. They receive this by selling their company in parts or borrowing from other organisations. This process takes place by buying and selling of securities.
3. What are the types of securities on the Capital Market?
Stock allows the holder to share in the profits of the company. There are two types – common and preferred. The difference is that preferred stocks provide a fixed rate of profit, known as dividend and are paid relatively earlier.
So that’s the basics of securities! Further on this and much more in the next chapters! Stay Tuned.