The securities market is typically a constituent of the more significant economic market where all the securities within the market can be purchased and retailed amid issues of the market based on degree of demand and delivery. Securities markets comprise of equity markets, bond markets and derivatives markets where all the value can be calculated and individuals both trained and non-trained can gather. Equity securities are considered as shares of a business where a person can buy stocks of an organization via a broker (Tuckman & Serrat, 2011). Also, an individual can acquire shares of a mutual fund that selects the stocks of him or her. The second market for this type of security is the stock market and incorporates the New York stock exchange.
Debt securities are considered as loans referred to as bonds that are made to a business or a country. One can acquire these bonds from a broker and can also decide to purchase mutual funds of the selected obligations; however, to ensure an efficient bond sale, borrowers ought to pay more interest tax if their rating is below AAA. On the other, reduced scores are typically referred to as junk bonds, and despite the risk associated with them, investors still acquire these junk bonds due to the highest interest rate they offer (Tuckman & Serrat, 2011). Finally, derivative securities are built upon the value of underlying stocks, bonds or other related assets. They enable traders to acquire a higher return as compared to purchasing the asset itself.
Tuckman, B., & Serrat, A. (2011). Fixed income securities: tools for today’s markets (Vol. 626). John Wiley & Sons.