Introduction to Investments in Securities definitions Flashcards
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.
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