There are several definitions of what is a security, but in summary we can say that:
- It is an investment of money
- There is an expectation of profits from the investment
- The investment of money is in a common enterprise
- Any profit comes from the efforts of a promoter or third party
Securities can be broadly categorized in three types: equity, debt or hybrid. An equity security represents ownership interest held by shareholders in an entity; A debt security represents money that is borrowed and must be repaid, with terms that stipulates the size of the loan, interest rate and maturity or renewal date; Hybrid securities, as the name suggests, combine some of the characteristics of both debt and equity securities.