What are securities defined as?

Securities are defined as financial instruments that hold some form of monetary value and can be traded. They are broadly categorized into two main types: debt securities and equity securities.

The correct characterization provides clarity on the nature of certain financial instruments, particularly in the context of investments. Certificates of beneficial ownership, which represent an undivided interest in a trust, exemplify a specific type of security that allows investors to have a stake in the underlying assets managed by that trust. This structure is common in investments like Real Estate Investment Trusts (REITs) where ownership in the underlying property is conveyed through these certificates, giving investors exposure to real estate while maintaining liquidity through the trade of the certificates.

Other definitions highlight specific forms of financial instruments but do not encompass the broader concept of securities. While debts owed by a company are indeed a form of security (often corporate bonds), they do not define what securities are as a whole. Equity in a private firm refers specifically to ownership interests, which is a section of securities but lacks the comprehensive nature of the term. Financial liabilities issued by a government, such as government bonds, are also a specific category within securities but do not capture the entire definition.

Thus, the definition that describes certificates of beneficial ownership is