Marketable Securities: Marketable securities mean a short term financial assets that create interest for its holders and easily be converted into cash. They are securities or debts that are to be sold or redeemed within a year. At any time a security holder can sell this security in the financial market and can collect cash from selling this security. They are the financial instruments that one can easily buy or sell in the market. It is one kind of liquid assets. These marketable securities increase the efficiency of the money market and reduce the cost of capital and financially increase the liability of the business. These are financial instruments that can be easily converted to cash such as government bonds, common stock or certificates of deposit.
According to Besley and Brigham, “Securities that can be sold on short notice without loss of principle or original investment.”
Marketable securities are liquid financial instruments that can be swiftly converted into cash at a rational price. There are numerous types of marketable securities, the most common types of equity and debt securities are, relatively, stocks and bonds. They are often classified into two groups: marketable equity securities and marketable debt securities.
- A maturity period of 1 year or less
- The ability to be bought or sold on a public stock exchange or public bond exchange,
- Having a strong secondary market that makes for liquid buy and sells transactions,
- Have higher liquidity, effectively lowering risk.