What are Marketable Securities?
Marketable securities are highly liquid assets that can be easily converted into cash. They have short maturities, usually less than a year, and their prices aren't significantly affected by buying or selling rates.
Understanding Marketable Securities
Companies keep cash reserves for unexpected expenses or investment opportunities. However, to avoid cash stagnation and generate returns, they invest in marketable securities. These are financial instruments that can be quickly sold when needed. They include marketable equity securities and marketable debt securities.
Marketable securities are traded on a robust secondary market, which enables efficient transactions and provides accurate pricing information. Despite offering lower returns due to their liquidity, they are considered safe investments.
Key Features of Marketable Securities
- High Liquidity
- Easy Transferability
- Low Returns