What do equity securities represent?

Equity securities represent ownership in a corporation. When an individual or entity purchases equity securities, such as common or preferred stock, they are essentially buying a share of the company and becoming a partial owner. This ownership grants shareholders certain rights, such as voting on key corporate matters, receiving dividends, and benefiting from the company’s growth in value.

Equity securities are distinct from debt instruments, which involve lending money to the corporation and expecting repayment. The other options refer to different financial instruments with specific characteristics: loans correlate to debt, cash equivalents denote liquid assets held by a company, and debt obligations pertain to government bonds or similar instruments. Hence, the ownership aspect outlined in the correct answer captures the essence of what equity securities represent.