01 What is a security? (الأوراق المالية)
Break the definition into its four working parts:
02 Two types, at a glance
| Dimension | Title deeds (shares) | Debt deeds (bonds) |
|---|---|---|
| Represents | Ownership — an equity interest | A loan or obligation |
| Holder is a… | Part-owner (shareholder) | Creditor |
| What the holder gets | Shareholder rights — voting, dividends | A specific amount on a certain date, in exchange for interest |
| Typical reason issued | Capital divided into equal parts | The company needs a loan to expand |
03 Title deeds — shares
Shares are considered title deeds. They represent equal parts of a company's capital.
Owning a share means
- Holding ownership in the company.
- Gaining shareholder rights — such as voting on company matters.
- Receiving dividends.
How shares differ from debt deeds
Debt deeds signify a loan or obligation. Shares reflect an equity interest in a business.
04 Debt deeds — bonds
A bond is a financial document. It acts as a promise from a bank or company to pay a specific amount to the holder on a certain date, in exchange for interest.
Why it exists: usually because a company needs a loan to expand its business.
05 What is a regular market?
Because buyers and sellers deal with each other freely, the prices of the same goods tend to become uniform across the entire market — easily and quickly.
06 Where "bourse" comes from
The idea of an official, organized monetary market traces back to a hostelry in Bruges, Belgium.
- 1285 · Bruges, BelgiumRobert van der Buerze founds the inn Huis Ter Beurze. It becomes a meeting place for European merchants and traders in the late medieval period.
- Expert guidanceIts managers give financial advice to visiting traders. That service becomes the "Beurze Purse" — the root of the word bourse, meaning an organized trading venue.
- A trading hubThe building eventually becomes a place used only for trading commodities.
- SpreadThe model spreads to other cities, and many stock exchanges adopt the name.
- 18th century · ParisThe founding of the Paris Bourse shapes and speeds up the growth of modern stock markets across Europe.
07 The stock exchange — definition
What the exchange does
- Gives investors a platform to trade these instruments.
- Helps with price discovery and liquidity.
- Sets rules and regulations to keep trading fair.
Examples: the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE).
The "seat"
Traditionally, traders had to buy a "seat" to become members and trade. Leasing seats is less common now because most trading happens on electronic platforms online, so a physical seat isn't needed. Some exchanges may still offer memberships or access rights that can be leased or rented.
08 What trades on an exchange
- Stocks — shares representing ownership in a company.
- Bonds — debt securities issued by governments or corporations.
- Commodities — physical goods like gold, oil, or agricultural products, traded through futures contracts.
- Foreign exchange — trading currencies, which usually happens in a separate market.
09 Regular market vs. stock market — 4 differences
| Dimension | Regular market | Stock market (bourse) |
|---|---|---|
| 1. Who deals with whom | Seller meets the buyer face to face | Deals are sometimes done through brokers and intermediaries |
| 2. Where the goods are | Right there in front of the dealers | Kept elsewhere — in warehouses or private banks |
| 3. Inspection & pricing | Delivery and pricing happen after the buyer checks the goods | Works differently — no inspection before the deal |
| 4. Nature of the deal | Buying and selling are real | Can be speculation on price differences, without paying the price or delivering the goods |
10 Flashcard glossary
Click a card to flip it.
11 Pop quiz
14 questions covering the whole lecture.