Security
A financial instrument that represents: an ownership position in a
publicly-traded corporation (stock), a creditor relationship with
governmental body or a corporation (bond), or rights to ownership as
represented by an option. A security is a fungible, negotiable financial
instrument that represents some type of financial value. The company or
entity that issues the security is known as the issuer.
Debenture
A type of debt instrument that is not secured by physical assets or
collateral. Debentures are backed only by the general creditworthiness
and reputation of the issuer. Both corporations and governments
frequently issue this type of bond in order to secure capital. Like
other types of bonds, debentures are documented in an indenture.
Derivative
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
Mortgage
A debt instrument that is secured by the collateral of specified real
estate property and that the borrower is obliged to pay back with a
predetermined set of payments. Mortgages are used by individuals and
businesses to make large purchases of real estate without paying the
entire value of the purchase up front.
Mortgages are also known as "liens against property" or "claims on property."
Mortgages are also known as "liens against property" or "claims on property."
Nonperforming Asset
A debt obligation where the borrower has not paid any previously agreed
upon interest and principal repayments to the designated lender for an
extended period of time. The nonperforming asset is therefore not
yielding any income to the lender in the form of principal and interest
payments.
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