Federal Securities: Security Definition

Question 1

Security Definition

Answer 1

“Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in a profit-sharing agreement, collateral-trust certificate, preorganization certificate of subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group of index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrumentality common known as a ‘security,’ or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.”

Question 2

Security Definition 2

Answer 2

Investment Contract is most important

• investment of money
• in a common enterprise
• with expectation of profit
• to be earned by the actions of others
• Passive investor needs more protection*
• Investment purpose more likely to create a security than consumption*