Which of the following financial instruments can be classified as securities 1 Bonds 2 Shares 3 Fixe...........

Economic Affairs Financial Markets

Download Solution PDF

Which of the following financial instruments can be classified as securities?

1. Bonds

2. Shares

3. Fixed Deposits

Select the correct answer using the code given below:

1 and 2 only

2 and 3 only

1 and 3 only

1,2 and 3

छोटे Courses बड़े Results

Master Financial Markets

Prepare through Micro-courses

Try Now

Explanation:

Financial instruments which are tradable or that can be bought and sold are generally referred to as securities. For eg. shares, bonds etc. From the definition, it can be seen that "securities" can belong to both the capital market and money market. The key aspect is their marketability.
Securities can represent either ownership or debt position or both, or it can mean rights or entitlements. The key aspect is that it should be transferable. For instance, Fixed Deposit with banks is not considered as security since it cannot be transferred to another person.
In India, the word "securities" is defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (SCRA). The term securities include the following in India: shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporates derivatives which includes :
a contract which derives its value from the prices, or index of prices, of underlying securities;
a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;
Repos and Reverse Repos (being incorporated through the Finance Act, 2015)
Commodity Derivatives (being incorporated through the Finance Act, 2015)
any instrument which is notified as a derivative by Central Government (being incorporated through the Finance Act, 2015)
Government security - security created and issued by the Central Government or a State Government
units or any other instrument issued by any collective investment scheme to the investors in such schemes
units or any other such instrument issued to the investors under any mutual fund scheme but does not include any unit-linked insurance policy which is a hybrid instrument providing for life risk cover and investments
security receipts issued under SARFAESI Act
Securitized debt instruments (collateralized debt obligations etc.)
such other instruments as may be declared by the Central Government to be securities; and
Rights or interest in securities
The market for securities is regulated by Securities and Exchange Board of India (SEBI).