A security is:

Question

A security is:

Quizplus · Accepted Answer

A security is a tradable contract that entitles its owner to certain rights, such as ownership in a company, a promise of future repayment from a borrower, or the right to receive a specific stream of cash flows. Examples of securities include stocks, bonds, and options.

Option A is incorrect as a private firm that accepts deposits and extends loans is a bank, not a security.

Option B is describing the process of banks using depositor's funds to make loans, but it does not define what a security is.

Option C is incorrect as the due date of loan repayment is not a defining characteristic of a security.

Option E is a definition of credit risk, which is a risk associated with investing in a bond, but it is not a definition of security.

A Security Is