Legal Definitions - certificated security

A certificated security is a type of collateral that is given or pledged to guarantee the fulfillment of an obligation. It is an instrument that shows the holder's ownership rights in a company or government, their creditor relationship, or other rights.

Examples of certificated securities include stocks, bonds, and certificates of deposit. These securities represent an interest based on an investment in a common enterprise rather than direct participation in the enterprise. For instance, a stock represents ownership in a company, while a bond represents a loan to a company or government.

The value of a certificated security depends on the financial condition of the issuer. For example, the value of a stock depends on the profitability or future prospects of the company that issued it. The value of a bond depends on the financial condition of the issuer and the interest rate it pays.

Overall, certificated securities are important for investors because they provide a way to invest in companies or governments and earn a return on their investment.