A misused term often applied indiscriminately to shares, debentures, etc. In fact, a security is something given or guaranteed by the borrower as a safeguard for a loan. The term is often applied to debentures and similar loan stock, and to negotiable instruments. Certificates of liability are known as securities; so sometimes are government stocks or any loans whose repayment is guaranteed. The term should not be applied to shares. In banking and money-lending, security is the property offered as backing, or collateral, for a loan by the bank or moneylender, may be supplied either by the borrower, a third party or both.
|Reference: The Penguin Business Dictionary, 3rd edt.|