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Introduction to Investments in Securities definitions

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  • Security
    A financial instrument representing either ownership in a company or a creditor relationship, such as stocks or bonds.
  • Equity Security
    An investment that signifies ownership interest in a company, typically through common or preferred stock.
  • Debt Security
    A financial asset representing a loan made to another entity, usually in the form of bonds, with repayment plus interest.
  • Dividend
    A distribution of a company's earnings to shareholders, providing income to those holding equity securities.
  • Capital Gain
    The profit realized from selling an investment at a price higher than its purchase cost.
  • Trading Security
    A short-term investment intended for active buying and selling, with changes in value reported on the income statement.
  • Held to Maturity
    A classification for debt investments intended to be kept until their maturity date, recorded at amortized cost.
  • Available for Sale
    A category for securities not actively traded but available for sale, with value changes reported in other comprehensive income.
  • Fair Value
    The current market price of an asset, used to adjust the value of certain securities on financial statements.
  • Unrealized Gain
    An increase in the value of an investment that has not yet been sold, affecting financial statements differently by classification.
  • Unrealized Loss
    A decrease in the value of an investment that remains unsold, with reporting dependent on the security's classification.
  • Amortized Cost
    The adjusted value of a debt investment on the books, reflecting principal and any premium or discount over time.
  • Other Comprehensive Income
    A section of equity where certain gains or losses, such as those from available for sale securities, are reported outside net income.
  • Balance Sheet
    A financial statement showing a company's assets, liabilities, and equity, including the classification of investments.
  • Interest
    The return earned from lending money through debt securities, typically paid periodically by the borrower.