Which of the following best defines a security?
A)It is a claim on the past flow of income.
B)It is a claim on the depreciation of income.
C)It is a fixed payment.
D)It is a claim on the future flow of income.

Question

Quizplus · Accepted Answer

A security is essentially a financial instrument that represents a claim on the future flow of income or the future value of an asset. Examples of securities include stocks, bonds, and options. Options and derivatives are contracts that allow investors to buy and sell underlying assets at specific prices in the future, making them essentially claims on the future flow of income or value.

Which of the Following Best Defines a Security