Securities; meaning, types, shares, stocks, bonds, gilt-edged and debentures. - SS3 Commerce Past Questions and Answers - page 1
What do securities represent?
Ownership or debt in a company or government entity.
Personal loans provided by financial institutions.
Currency used for international trade.
What is the main difference between shares and bonds?
Shares represent ownership, while bonds represent debt.
Shares pay fixed interest, while bonds pay dividends.
Shares are issued by governments, while bonds are issued by companies.
What are gilt-edged securities?
Debt securities issued by governments.
Ownership shares in a company.
Low-risk personal loans.
What is the role of debentures?
To represent ownership in a company.
To pay fixed interest payments to investors.
To provide personal loans to individuals.
Why are securities bought and sold in financial markets?
To raise capital for companies and governments.
To exchange goods and services.
To determine the value of currencies.
How do shareholders benefit from owning shares in a company?
Shareholders have a claim on the company's assets and earnings. They can potentially receive dividends (profits distributed by the company) and have the right to vote on certain matters related to the company's operations.
What is the key difference between gilt-edged securities and debentures?
Gilt-edged securities are debt securities issued by governments and are considered low-risk investments. They pay fixed interest payments and are backed by the government's creditworthiness. On the other hand, debentures are long-term debt securities issued by companies, paying interest to investors. They represent company debt and are not backed by specific assets.