Financial Instrument

In this lesson, I got to learn the ways of earning from financial instruments. In which you
can either buy or sell or even hold said financial instrument.

It is also tackled in the video that an investment class is a group of investments that
exhibits similar characteristics. There are plenty of investment classes that exist but the
video emphasizes the most common of them all which are the Equity securities and Debt
securities.

When we say Equity securities it represents part ownership, in other words, if an investor
decided to hold his investment in equity securities his return is represented by dividends,
and if an investor decided to trade his investment he can either get a profit or loss
depending on how much the market price changes. Debt securities on the other hand is a
fixed income instrument that represents a loan made by an investor to a borrower. Unlike
equity securities, debt securities require the borrower to repay the principal borrowed.

Upon finishing the video I’ve arrived at a conclusion that if I were to choose between
equity securities and debt securities, I will most likely choose debt securities as it provides
regular payments of interest and guaranteed repayment of principal hence less risky
compared to equity securities.