8.1 Meaning and Types of Corporate Securities

The meaning: the corporate security = the instrument representing a financial claim on the company — the tradable embodiment of the investment (the capital market's raw material). The types (the primary division): (1) ownership securities — the SHARES (the equity: the member's ownership stake, the dividend-and-voting rights, the residual claim); (2) debt securities — the DEBENTURES/BONDS (the lender's claim: the fixed return, the priority over equity, the repayment's discipline); the hybrids (the convertible debentures — the debt-that- becomes-equity; the preference shares' hybrid character). The securities as the company's two financing doors: the equity (the owners' capital) and the debt (the lenders' capital) — the capital structure's building blocks.