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What are 'Marketable Securities'


Series6ExamPrep:WhatIsASecurity?
Marketable securities are financial instruments that are very liquid and can
be quickly converted into cash at a reasonable price. The liquidity of
marketable securities comes from the fact that the maturities tend to be less
than one year, and that the rates at which they can be bought or sold have
little effect on prices. Examples of marketable securities include commercial
paper,, banker's acceptances
paper
instruments.
acceptances,, Treasury bills and other money market

BREAKING DOWN 'Marketable Securities'


Marketable securities are defined as any unrestricted financial instrument
that can be bought or sold on a public stock exchange or a public bond
00:00 03:00
exchange. Therefore, marketable securities are classified as either a
marketable equity security or a marketable debt security.
security. Other
requirements of marketable securitiesTopics
include Reference
having a strong Advisors Marketsthat can
secondary market Simulator
facilitate
quick buy and sell transactions, and having a secondary market that provides accurate price quotes
for investors. The return on these types of securities is low, due to the fact that marketable securities
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are highly liquid and are considered safe investments.

Marketable Equity Securities


Marketable equity securities can be both common stock or preferred stock. stock. They are equity
securities of a public company held by another corporation, and are listed on that holding
company's balance sheet.
sheet. If the stock is expected to be liquidated or traded within one year, the
holding company will list it as a current asset. Conversely, if the company expects to hold the stock
for longer than one year, it will list the equity as a non-current asset. All marketable equity securities,
both current and non-current, are listed at the lower value of cost or market.

If, however, a company invests in another company's equity in order to acquire or control that
company, the securities aren't considered marketable equity securities. The company instead lists
them as a long-term investment on its balance sheet.

Marketable Debt Securities


Marketable debt securities are considered any short-term bond issued by a public company held by
another company. Marketable debt securities are normally held by a company in lieu of cash, so it's
even more important that there is an established secondary market. All marketable debt securities
are held at cost on a company's balance sheet as a current asset, until a gain or loss is realized upon
the sale of the debt instrument.
instrument.

Marketable debt securities are held as short-term investments and are expected to be sold within
one year. If a debt security is expected to be held for longer than one year, it should be classified as a
long-term investment on the company's balance sheet.
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Marketable Securities Topics Reference Advisors Markets Simulator

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Security
Video Definition

Short-Term Investments
Series6ExamPrep:WhatIsASecurity?

Debt Security

Liquidating Market

Available-For-Sale Security
A security is a financial instrument that represents an ownership position in a publicly-traded
corporation ((stock
stock),
), a creditor relationship with governmental body or a corporation (bond (bond),
), or
Capital Markets
rights to ownership as represented by an option
option.. A security is a fungible
fungible,, negotiable financial
instrument that represents some type of financial value. The company or entity that issues the
security is known as the issuer.
Generic Securities

BREAKING
DOWN 'Security'
Securities
Interest
are
Rate typically
Risk divided into debts and equities. A debt security represents money that is
borrowed and must be repaid, with terms that define the amount borrowed, interest rate and
maturity/renewal date. Debt securities include government and corporate bonds, certificates of
Liquid Asset
deposit (CDs),
(CDs), preferred stock and collateralized securities (such as CDOs and CMOs).

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Marketable Securities Topics Reference Advisors Markets Simulator

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Security

Short-Term Investments

Debt Security

Liquidating Market

Available-For-Sale Security

Capital Markets

Generic Securities

Interest Rate Risk

Liquid Asset
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