security

noun se·cu·ri·ty \ si-ˈkyu̇r-ə-tē , -'kyər- \
Updated on: 13 Oct 2017

Definition of security

plural securities
1 :the quality or state of being secure: such as
a :freedom from danger :safety
b :freedom from fear or anxiety
c :freedom from the prospect of being laid off
  • job security
2 a :something given, deposited, or pledged to make certain the fulfillment of an obligation
b :surety
3 :an instrument of investment in the form of a document (such as a stock certificate or bond) providing evidence of its ownership
4 a :something that secures :protection
b (1) :measures taken to guard against espionage or sabotage, crime, attack, or escape
(2) :an organization or department whose task is security

Examples of security in a Sentence

  1. We must insure our national security.

  2. The college failed to provide adequate security on campus after dark.

  3. There was a lapse in security and the inmates escaped.

  4. We have to go through security at the airport.

  5. We called security when we found the door open.

  6. The meeting was held under tight security.

  7. The prisoner was being kept under maximum security.

  8. I like the security of knowing there will be someone there to help me when I need help.

  9. Growing up in a close family gave her a sense of security.

Recent Examples of security from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'security.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of security

15th century


Financial Definition of SECURITY

fixed-income security

What It Is

A fixed income security is an investment that pays regular income in the form of a coupon payment, interest payment or preferred dividend.

How It Works

Fixed income securities provide periodic income payments at an interest or dividend rate known in advance by the holder. The most common fixed-income securities include Treasury bonds, corporate bonds, certificates of deposit (CDs) and preferred stock.

Holders of Treasury bonds and CDs receive a fixed interest rate based on a par value over a specific period of time. Holders of preferred stock are entitled to a periodic fixed dividend specified by the issuing company for as long as they own the shares.

To illustrate, suppose an investor owns a Treasury bond with a par value of $1,000 and an annual yield of 6%. This investor is guaranteed a payment of $60 each year for the life of the bond. Similarly, an investor who holds preferred stock in Company XYZ might be promised a quarterly dividend payment of $5 per share, which he can dependably receive for as long as he holds the shares.

Why It Matters

Fixed income securities are an excellent choice for risk-averse investors seeking a stable source of income payments at predictable intervals. Fixed income investors and prospective investors should understand that the relatively low risk of fixed income securities generally translates into relatively lower returns.


hybrid security

What It Is

A hybrid security is a security that has characteristics of one or more asset classes.

How It Works

For example, a convertible bond is a hybrid security because it is a bond that allows the holder to exchange the bond for other securities (usually the issuer's stock). Mechanically, convertible bonds let the holder use the par value of the bond to purchase other securities from the issuer at a specified price.

For example, consider a Company XYZ bond with a $1,000 par value that is convertible into Company XYZ common stock. If the conversion price of the common shares is $25, then the bondholder can convert each of his or her bonds into 40 Company XYZ shares ($1,000 / $25 = 40). In this scenario, we would say that the conversion ratio is 40:1. Many hybrid securities are callable, meaning that under certain circumstances the issuer can redeem them before they mature.

Why It Matters

Hybrid securities require their investors to conduct extra analyses. For instance, the conversion price is not the only aspect of a convertible bond to analyze. Like other bonds, convertible bonds usually offer a coupon, and their prices are based on prevailing market rates and the credit quality of the issuer. Because conversion would mean losing those interest payments, investors also compare the coupon payment of the bond to the dividend yield of the common shares when they're thinking of converting.

Another thing to consider when investing in hybrid securities is their trading behavior. For instance, the more a convertible bond is "in the money," that is, the more the market value of the shares exceeds the conversion price, the more the bond itself trades like a stock. The bond's price tends to rise as the stock price approaches the conversion price (similar to a call option). The more volatile the stock price when in this zone, the more volatile the bond price. Interestingly, this relationship allows convertible bondholders to participate in the company's stock price appreciation.



SECURITY Defined for English Language Learners

security

noun

Definition of security for English Language Learners

  • : the state of being protected or safe from harm

  • : things done to make people or places safe

  • : the area in a place (such as an airport) where people are checked to make sure they are not carrying weapons or other illegal materials


SECURITY Defined for Kids

security

noun se·cu·ri·ty \ si-ˈkyu̇r-ə-tē \

Definition of security for Students

plural securities
1 :the state of being safe :safety
  • national security
2 :freedom from worry or anxiety
  • financial security
3 :something given as a pledge of payment
  • He gave security for a loan.
4 :something (as a stock certificate) that is evidence of debt or ownership

Medical Dictionary

security

noun se·cu·ri·ty \ si-ˈkyu̇r-ət-ē \

medical Definition of security

plural securities
:freedom from fear or anxiety
  • need for security dates back into infancy
  • —K. C. Garrison

Law Dictionary

security

noun se·cur·i·ty \ si-ˈkyu̇r-ə-tē \

legal Definition of security

plural securities
1 a :something (as a mortgage or collateral) that is provided to make certain the fulfillment of an obligation
  • used his property as security for a loan
b :surety — see also security for costs
2 :evidence of indebtedness, ownership, or the right to ownership; specifically :evidence of investment in a common enterprise (as a corporation or partnership) made with the expectation of deriving a profit solely from the efforts of others who acquire control over the funds invested
  • a security involves some form of investment contract
— see also due diligence
asset-backed security
:a security (as a bond) that represents ownership in or is secured by a pool of assets (as loans or receivables) that have been securitized
bearer security
:a security (as a bearer bond) that is not registered and is payable to anyone in possession of it
certificated security \sər-ˈti-fə-ˌkā-təd-\
:a security that belongs to or is divisible into a class or series of shares, participations, interests, or obligations, is a commonly recognized medium of investment, and is represented on an instrument payable to the bearer or a specified person or on an instrument registered on books by or on behalf of the issuer
convertible security
:a security (as a share of preferred stock) that the owner has the right to convert into a share or obligation of another class or series (as common stock)
debt security
:a security (as a bond) serving as evidence of the indebtedness of the issuer (as a government or corporation) to the owner
equity security
:a security (as a share of stock) serving as evidence of an ownership interest in the issuer; also :one convertible to or serving as evidence of a right to purchase, sell, or subscribe to such a security
exempted security
:a security (as a government bond) exempt from particular requirements of the Securities and Exchange Commission (as those relating to registration on a security exchange)
fixed-income security
:a security (as a bond) that provides a fixed rate of return on an investment (as because of a fixed interest rate or dividend)
government security
:a security (as a Treasury bill) that is issued by a government, a government agency, or a corporation in which a government has a direct or indirect interest
hybrid security
:a security with characteristics of both an equity security and a debt security
mortgage-backed security
:a security that represents ownership in or is secured by a pool of mortgage obligations; specifically :a pass-through security based on mortgage obligations
pass-through security
:a security representing an ownership interest in a pool of debt obligations from which payments of interest and principal pass from the debtor through an intermediary (as a bank) to the investor; especially :one based on a pool of mortgage obligations guaranteed by a federal government agency — compare collateralized mortgage obligation, remic
registered security
1 :a security (as a registered bond) whose owner is registered on the books of the issuer
2 :a security that is to be offered for sale and for which a registration statement has been submitted
restricted security
:a security accompanied by restrictions on its free transfer or registration of transfer
shelf security
:a corporate security held for deferred issue in a shelf registration
Treasury security
:a security issued by a government treasury :treasury 3
uncertificated security \ˌən-sər-ˈti-fə-ˌkā-təd-\
:a security that belongs to or is divisible into a class or series of shares, participations, interests, or obligations, that is a commonly recognized medium of investment, that is not represented by an instrument, and the transfer of which is registered on books by or on behalf of the issuer
unregistered security
:a security for which a registration statement has not been filed
when-issued security
:a security traded on a conditional basis prior to its issue
3 a :measures taken to guard against espionage or sabotage, crime, attack, or escape
b :an organization or department whose task is security


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