May 202014
 

How does a structure of a security looks like? Typical security (share, bond) is composed of two major parts:
- The casing,
- Coupon sheet with a voucher for the uptake of the new sheet. However, there is a lot of deviations from this rule of construction. When discussing securities we should pay attention to two concepts – essential for the operation of financial markets:
- Liquidity – the ability for quick and profitable exchange for cash. (Securities that are continuously circulating in the market provide high liquidity, because there is always a lot of buyers and sellers. Consequently, it is easy to “liquidate”).
- Transferability – the wide availability of security, easy formula of its purchase and sale, ease of transfer of ownership, and above all, the possibility of transfering the title.
To be a holder of asset you need money. When you buy a security you need to pay attention on the interest rate, denomination, date and terms of repayment and other powers available to the buyer. Continue reading »