There are two sources that I have found about securities and am not sure how they are consistent with each other.
The first one is from Wikipedia article about financial instruments:
Financial instruments can be categorized by form depending on whether they are cash instruments or derivative instruments:
Cash instruments are financial instruments whose value is determined directly by markets. They can be divided into securities, which are readily transferable, and other cash instruments such as loans and deposits, where both borrower and lender have to agree on a transfer.
Derivative instruments are financial instruments which derive their value from the value and characteristics of one or more underlying entities such as an asset, index, or interest rate. They can be divided into exchange-traded derivatives and over-the-counter (OTC) derivatives.
The second is from Wikipedia article about securities:
A security is generally a fungible, negotiable financial instrument representing financial value.1 Securities are broadly categorized into:
- debt securities (such as banknotes, bonds and debentures),
- equity securities, e.g., common stocks; and,
- derivative contracts, such as forwards, futures, options and swaps.
So the first one says securities are a special kind of cash instruments (distinct from derivative instruments) that are readily transferable. The second says securities are fungible and negotiable financial instruments including derivatives.
- Are they consistent with each other? If not, what is the definition?
- Do securities include derivatives?
- Does "transferable" mean the ability to sell the security after its firs purchase? Is it same as "tradable"?
- What is the opposite concept to securities?
Thanks and regards!