Securities

Its concept

Security is any document that gives the holder a right to money or possesses property. Among the securities traded in stock exchange are:

1. Share. This is a unity of capital of a company divided into units of uniform value whoever contributed to the capital of the company will be the owner and called a share holder. In that case a share certificate will be issued to certify that a person has contributed some amount of money in the total capital to be invested in the company. The shares can be divided into two classes
   • Ordinary shares - Are shares which are owned by promoters of company who are paid after all other shareholders have been paid.
   • Preference shareholder - Are shares of company which are considered first in the distribution of profits.
2. Guilt-edged. These are securities which are mainly issued by the government in order to regulate circulation and use them to implement fiscal and monetary policy. For example; treasury bills, government stocks, government bonds etc.
3. Blue chips. These are shares of companies of high repute. That is, companies which are performing better in business. For example CRDB, Precision airways, Swiss air etc.
4. Bonds. These are loan securities given by company or government or individual showing its indebtedness.
5. Debenture. This is a document or a loan certificate issued by the company under its seal indicating that a company or individual has acknowledged the debts. It can be naked, redeemable, irredeemable.
6. Stocks. These are set of shares which are issued in a bundle collectively or in a group e.g. TOL, TATCPA.