A trading instrument such as stocks, bonds, and short-term investments.
SEC: The Securities and Exchange Commission. The SEC is an agency of the federal government which is in charge of monitoring and regulating the securities industry.
Convertible Security: A security that is convertible into another security. Generally, a convertible bond or convertible preferred stock is convertible into the underlying stock of the same corporation. The rate at which the shares of the bond or preferred stock are convertible into the common is called the conversion ratio.
Derivative: Financial instruments based on the market value of an underlying asset.
Derivative Security: A financial security whose value is determined in part from the value and characteristics of another security, the underlying security.
Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.