Which of the following are defined as securities?
(1 point)
safe investments
financial institutions
financial markets
tradable financial assets
tradable financial assets
Out of the options provided, tradable financial assets are defined as securities. Securities refer to instruments that represent ownership or debt and have financial value. Tradable financial assets, such as stocks, bonds, and derivatives, are considered securities as they can be bought, sold, or exchanged on financial markets. Safe investments, financial institutions, and financial markets are not specifically defined as securities but play important roles in the functioning of securities markets.
To determine which of the following options are defined as securities, we need to understand what a security is. A security is a tradable financial asset, representing ownership in a publicly-traded company, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option. Securities can be bought, sold, or traded on financial markets.
Now let's evaluate each option:
1. Safe investments: This term refers to low-risk investments that typically offer a guaranteed return, such as certificates of deposit (CDs) or money market funds. While these investments can be considered financial assets, they are not necessarily tradable, and therefore do not fall under the definition of securities.
2. Financial institutions: Financial institutions such as banks, credit unions, and insurance companies play a crucial role in the financial system. However, they are not themselves classified as securities. Instead, they facilitate the trading or issuance of securities for customers.
3. Financial markets: Financial markets, such as stock exchanges and bond markets, are platforms where securities are bought and sold. They provide a framework for investors and traders to trade securities. While financial markets are integral to the securities market, they are not considered securities themselves.
4. Tradable financial assets: Tradable financial assets are investments that can be bought and sold on financial markets. These assets can include stocks, bonds, options, and commodities. As mentioned earlier, securities are defined as tradable financial assets, so this option fits the definition.
Therefore, the correct answer is "tradable financial assets."