Definition of Financial Security

Financial security is a paper-based instrument that has a financial worth. In finance terms financial security can be of two types; debt securities and equity securities. Debt securities are time-limited and usually have a maturity date. So debt instruments can be either short-term or long-term. Examples of debt financial securities are bonds, t-bills, debentures, bank certificates, etc.

In equity securities, we have stocks, options, and warrants. The most basic difference between equity security and debt security is that the equities give the holder ownership of the security and it has usually no maturity dates whereas bonds do.