Marketable Securities
Marketable Securities
Marketable securities are financial assets that are traded on a public stock exchange. They are typically traded in large enough quantities to allow for easy entry and exit by investors.
Examples of Marketable Securities:
- Stocks
- Bonds
- Treasury securities
- Exchange-traded funds (ETFs)
- Futures contracts
- Options
Characteristics of Marketable Securities:
- Traded on a public exchange: Marketable securities are traded on a public exchange, which means that their prices are visible to all investors.
- Large size: Marketable securities are typically traded in large quantities, which makes them easier to buy or sell.
- High liquidity: Marketable securities have high liquidity, which means that they can be easily bought or sold without significant price fluctuations.
- High marketability: Marketable securities are highly marketable, which means that they can be easily traded between investors.
- Standardization: Marketable securities are standardized, which means that they have a uniform set of rules and regulations.
Benefits of Marketable Securities:
- Access to a wide range of investment options: Marketable securities offer a wide range of investment options to suit various risk tolerance and goals.
- Convenience: Marketable securities are convenient to trade, as they can be easily bought or sold through brokerage firms.
- Price transparency: The prices of marketable securities are transparent, which means that investors can see all bids and asks.
- Protection of investor interests: Marketable securities are regulated by government agencies, which protects investors from fraud and other abuses.
Uses of Marketable Securities:
- Investment: Investors use marketable securities to invest their money and generate returns.
- Collateral: Marketable securities can be used as collateral for loans and other financial instruments.
- Hedge funds: Hedge funds use marketable securities to speculate on price fluctuations.
- Speculation: Speculators use marketable securities to speculate on future price movements.
Conclusion:
Marketable securities are a type of financial asset that are traded on a public stock exchange. They are characterized by their high liquidity, marketability, and standardization. Marketable securities offer a wide range of investment options and are convenient to trade.