1. What do you mean by securities?

Explain different types of equity-based and debt-based

securities.

Securities are fungible and tradable financial instruments used to raise capital in public
and private markets. Security can represent ownership in a corporation in the form of
stock, a creditor relationship with a governmental body or a corporation represented by
owning that entity's bond; or rights to ownership as represented by an option.

There are primarily three types of securities: equity—which provides ownership rights to
holders; debt—essentially loans repaid with periodic payments; and hybrids—which
combine aspects of debt and equity.

Equity Securities

An equity security represents ownership interest held by shareholders in an entity (a

company, partnership, or trust), realized in the form of shares of capital stock, which
includes shares of both common and preferred stock.

Holders of equity securities are typically not entitled to regular payments—although equity
securities often do pay out dividends—but they are able to profit from capital gains when
they sell the securities (assuming they've increased in value).

Debt Securities

A debt security represents borrowed money that must be repaid, with terms that stipulate
the size of the loan, interest rate, and maturity or renewal date.

Debt securities, which include government and corporate bonds, certificates of deposit
(CDs), and collateralized securities (such as CDOs and CMOs), generally entitle their
holder to the regular payment of interest and repayment of principal (regardless of the
issuer's performance), along with any other stipulated contractual rights (which do not
include voting rights).

2. Explain different types of instruments related to government securities.

In the investing world, "government security" applies to a range of investment products a

governmental body offers. Government securities are government debt issuances used
to fund daily operations, and special infrastructure and military projects.

They guarantee the full repayment of invested principal at the maturity of the security and
often pay periodic coupon or interest payments. Government securities are considered
to be risk-free as they have the backing of the government that issued them.

Savings Bonds

Savings bonds offer fixed interest rates over the term of the product. Should an investor
hold a savings bond until its maturity they receive the face value of the bond plus
any accrued interest based on the fixed interest rate. Once purchased, a savings bond
 cannot be redeemed for the first 12 months it is held. Also, redeeming a bond within the
first five years means the owner will forfeit the months of accrued interest.

T-Bills

Treasury bills (T-Bills) have typical maturities of 4, 8, 13, 26, and 52 weeks. These short-
term government securities pay a higher interest rate return as the maturity terms
lengthen. For example, as of Sept. 10, 2021, the yield on the four-week T-bill was 0.06%
while the one-year T-bill yielded 0.08%.2

Treasury Notes

Treasury notes (T-Notes) have two, three, five, or 10-year maturities making them
intermediate-term bonds. These notes pay a fixed-rate coupon or interest payment
semiannually and will usually have $1,000 face values. Two and three-year notes have
$5,000 face values.

3. Discuss valuation and the different approaches of valuation of bonds.

Bond valuation is a technique for determining the theoretical fair value of a particular
bond. Bond valuation includes calculating the present value of a bond's future interest
payments, also known as its cash flow, and the bond's value upon maturity, also known
as its face value or par value. Because a bond's par value and interest payments are
fixed, an investor uses bond valuation to determine what rate of return is required for a
bond investment to be worthwhile.
Understanding Bond Valuation
A bond is a debt instrument that provides a steady income stream to the investor in the form
of coupon payments. At the maturity date, the full face value of the bond is repaid to the
bondholder. The characteristics of a regular bond include:

 Coupon rate: Some bonds have an interest rate, also known as the coupon rate, which
is paid to bondholders semi-annually. The coupon rate is the fixed return that an investor
earns periodically until it matures.
 Maturity date: All bonds have maturity dates, some short-term, others long-term. When
a bond matures, the bond issuer repays the investor the full face value of the bond. For
corporate bonds, the face value of a bond is usually $1,000 and for government bonds,
the face value is $10,000. The face value is not necessarily the invested principal or
purchase price of the bond.
 Current price: Depending on the level of interest rate in the environment, the investor
may purchase a bond at par, below par, or above par. For example, if interest rates
increase, the value of a bond will decrease since the coupon rate will be lower than the
interest rate in the economy. When this occurs, the bond will trade at a discount, that is,
below par. However, the bondholder will be paid the full face value of the bond at maturity
even though he purchased it for less than the par value.

4. Explain in brief, the features of stock exchange and the requirements for listing of
securities.
 To have its shares traded on a stock exchange, a company must meet certain exchange
liquidity and financial requirements.

Listing requirements vary by exchange and include minimum stockholder's equity, a

minimum share price, and a minimum number of shareholders.

Requirements ensure that only high-quality securities are traded on an exchange.

Moreover, the high standards that companies must meet reassure investors of an
exchange's integrity and reputation.

Listing requirements are a set of conditions which a firm must meet before listing
a security on one of the organized stock exchanges, such as the NYSE, the Nasdaq, the
London Stock Exchange, or the Tokyo Stock Exchange.

The requirements typically include a certain size and market share of the security to be
listed. The underlying financial viability of the issuing firm is also a criterion. Exchanges
establish these standards as a means of maintaining their own integrity, reputation, and
visibility.

5. Differentiate between voluntary delisting and compulsory delisting.

Delisting is the removal of a listed security from a stock exchange. The delisting of a
security can be voluntary or involuntary and usually results when a company ceases
operations, declares bankruptcy, merges, does not meet listing requirements, or seeks
to become private.

Compulsory Delisting
Delisting order can be made on the non-fulfillment of the listing regulations of the
respective exchange.

Voluntary Delisting
Delisting order can be made on the non-fulfillment of the listing regulations of the
respective exchange

6. Discuss or explain online trading?

A trading platform is a software system used to trade securities. It allows investors to

open, close, and manage market positions online through a financial intermediary, such
as an online broker.

Online trading platforms are frequently offered by brokers either for free or at a discount
in exchange for maintaining a funded account and/or making a specified number of trades
per month. The best trading platforms offer a mix of robust features and low fees.

Trading platforms can offer an easy-to-use interface with basic order entry screens for
beginning investors. They can also offer more sophisticated tools such as real-time
streaming quotes, advanced charting tools, live news feeds, educational resources, and
access to proprietary research.
 There are two types of trading platforms: commercial platforms and proprietary platforms.
Commercial platforms are designed for day traders and retail investors. They are
characterized by ease of use and an assortment of helpful features, such as real-time
quotes, international news feeds, live, interactive charts, educational content, and
research tools.

7. Explain the meaning and process of dematerialization. What do you mean by depository
system?

Dematerialization (DEMAT) is the move from physical certificates to electronic

bookkeeping. Actual stock certificates are then removed and retired from circulation in
exchange for electronic recording. Dematerialization was designed to offer more security,
as well as increased speed, to financial trades. It has become the norm in bookkeeping
for financial institutions.

Dematerialization applies not only to stocks, but also to other forms of investment such
as bonds, mutual funds, and government securities. The use of dematerialization and
DEMAT accounts is comparable to using a bank and bank accounts to maintain one’s
assets rather than personally storing and exchanging paper money each time a
transaction is made.

The benefits of dematerialization can also include increased security and surety of
transactions and the elimination of steps that could slow down the process of clearing
transactions.