FINANCIAL SECURITY

A financial security is some type of financial instrument that is negotiable and has a recognized
financial worth. Usually referred to simply as securities, the financial security can take on several forms.
Generally, a financial security will have the potential to generate some additional return above face value
for either the holder of the issuer of the security.

One common example of a financial security is a debt security. Primarily securities of this type
include bonds, debentures, and banknotes. A bond issue normally provides a fixed return above the
purchase price or face value of the instrument. Debentures are written acknowledgments of debt owed
and can be used by the lender to designate an asset. Banknotes are essentially promissory notes that can
be called at any time and as such also represent a negotiable asset.

Equity securities are a second classification of financial securities. Within this category, the
financial security may be stock of some type. This would include common stocks, preferred stocks and
various other classes of stocks. All types of stock represent a financial asset that may be sold or used as
collateral if necessary.

A financial security may be issued by a number of different entities. Federal government agencies
or even local municipal governments may choose to issue bonds as a means of financing an upcoming
civic improvement project. Commercial companies often issue shares of stock to be purchased and sold
on the open market. Even banking organizations that operate on an international basis may issue some
form of financial security. While this is not always the case, a financial security issued by a government
entity is likely to carry an interest rate that is lower than any security issued by a commercial company.

In most cases, the purpose of issuing a financial security is to generate new capital in some form. This is
accomplished by attracting people who wish to invest in the security, due to the potential for generating
new capital in the form of interest. Some types of financial securities can guarantee a return over time,
such as with a bond issue. Other examples of the financial security, such as a stock issue, carry a greater
degree of risk. However, a financial security with a greater risk usually also carries a higher potential to
generate additional returns.

Capital market is simply any market where a government or a company (usually a

corporation) can raise money (capital) to fund their operations and long term investment. Selling bonds
and selling stock are two ways to generate capital, thus bond markets and stock markets (such as the Dow
Jones) are considered capital markets

- is a market for securities (debt or equity), where business enterprises (companies) and
governments can raise long-term funds. It is defined as a market in which money is provided for periods
longer than a year[1], as the raising of short-term funds takes place on other markets (e.g., the money
market). The capital market includes the stock market (equity securities) and the bond market (debt).
Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and
Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that
investors are protected against fraud, among other duties.

Capital markets may be classified as primary markets and secondary markets. In primary markets,
new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary
markets, existing securities are sold and bought among investors or traders, usually on a securities
exchange, over-the-counter, or elsewhere
Investment Banker

An individual or institution which acts as an underwriter or agent for corporations and

municipalities issuing securities. Most also maintain broker/dealer operations, maintain markets for
previously issued securities, and offer advisory services to investors. investment banks also have a large
role in facilitating mergers and acquisitions, private equity placements and corporate restructuring. Unlike
traditional banks, investment banks do not accept deposits from and provide loans to individuals. also
called investment banker.

Investment bankers advise their clients on high level issues of financial organization. They
manage the issuance of bonds, recommend and execute strategies for taking over and merging with other
companies, and handle selling a company’s stock to the public. The work thus involves lots of financial
analysis, and a strong background in finance and economics is a necessity. Personal and strategic skills
are vital to investment bankers as well, for they serve as strategists for their clients, helping them develop
their financial plans as well as implement them. At the profession’s highest level, investment bankers
serve as crucial figures in the shaping of the American and world economies, managing mergers of
multibillion-dollar corporations and handling the privatization of government assets around the world. All
this is time consuming, and investment bankers work long hours. Work weeks of 70 hours or more are
common, and all night sessions before deals close are the rule rather than the exception. Still, the work is
extremely interesting, and those who stay in the profession report high levels of job satisfaction.
Investment bankers spend large amounts of time traveling, to pitch ideas to prospective and current
clients or to examine the facilities of companies being purchased by their clients. In the office, they spend
their time developing strategies to pitch to clients, preparing financial analyses and documents, or
working with the sales forces of their banks in selling the bonds and stocks which are created by the
investment-banking department’s activities.

Initial Public Offering

An Initial Public Offering (IPO) referred to simply as an "offering" or "flotation," is when a

company (called the issuer) issues common stock or shares to the public for the first time. They are often
issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-
owned companies looking to become publicly traded.In an IPO the issuer may obtain the assistance of an
underwriting firm, which helps it determine what type of security to issue (common or preferred), best
offering price and time to bring it to market.

An IPO can be a risky investment. For the individual investor it is tough to predict what the stock or
shares will do on its initial day of trading and in the near future since there is often little historical data
with which to analyze the company. Also, most IPOs are of companies going through a transitory growth
period, and they are therefore subject to additional uncertainty regarding their future value.

What Does Initial Public Offering - IPO Mean?

The first sale of stock by a private company to the public. IPOs are often issued by smaller,
younger companies seeking the capital to expand, but can also be done by large privately owned
companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what
type of security to issue (common or preferred), the best offering price and the time to bring it to market.
Also referred to as a "public offering".
Securities traded in the stock exchange
In reference to the type of assets negotiated at the stock market they are basically liabilities, rights
subscription, warrants and, over all, shares.

 The shares are securities that constitute a proportional part of the share capital of the company
that issues them, and they represent for the owner a participation in it. They are, by its volume of
trade, the most important of the assets that can be bought or sold on thestock market.
 They are denominated as a rent of a variable interest due that its profitability is not fixed before
hand but that it depends on the results of the company that they represent.
 The rights of subscription are object of negotiation in the capital enlargement operations. Once
the capital enlargement operation through new shares is approved the period-denominated
“market of subscription of rights” begins in which the right to subscription appears in favor of the
share bearer to   subscribe new shares. This way the share bearers have two options, or well to
buy the new shares in a proportion to the number of the shares owned before the capital
enlargement, or well to sell on thestock market its rights in case they are not interested in
acquiring more shares.
 The liabilities constitute part of the required loan applied by the issuing institution. They are
representative debt securities. They can be distinguished between two great groups of liabilities:
state liabilities and private liabilities.
 The first are public debts issued by the government, while the others are issued by private
institution, generally non financial, although on certain cases banks, saving banks and
governmental institutions may also do it.
 Within this second group there exists different types: classical liabilities, convertible liabilities,
liabilities with warrants, zero coupon liabilities, indexed liabilities, subordinated liabilities,
international liabilities, etc.
 Finally, the warrants that are financial instrument incorporated into certain types of bonds, but
negotiable in a separate way.
 The owner of the warrant   acquires the right to buy or sell a determined number of shares of the
issuing company at a predetermined price and date.