Realized 1031 Glossary of Terms

Financial Security

Written by The Realized Team | Jun 20, 2022 12:00:00 PM

The term financial security represents a stake in a publicly-traded company, whether through stocks, bonds, or options. Owning stock in a company means the holder of the stock has an equity stake in the company. Bonds represent a creditor relationship. Options are rights to ownership. Stockholders have voting rights in the company, usually dependent on the number of shares they own. Creditors (bondholders) don’t have voting rights. For giving up their voting rights and any potential appreciation in the company’s value, bondholders are paid a consistent interest on their bonds. Bondholders are also one of the first in line (before stockholders) to be repaid their principal if the company files for bankruptcy.