Shares/Stock The Concept of marketable security

Holicent

VIP Contributor
A marketable security is a financial instrument which can be freely bought or sold in the secondary market without any restriction. It is a financial asset that has a readily determinable fair value and is normally traded in public exchanges. Marketable securities include equity shares, debt instruments such as bonds and commercial paper, money market instruments such as treasury bills etc.

A corporation issues its shares on the stock exchange to raise funds for business expansion or to repay debts. The money received from issuing shares is called capital raised. The term "marketable security" is generally used for debt instruments such as bonds and commercial paper which are issued by corporations, financial institutions and governments. These securities are tradable in organized markets such as the NSE, BSE etc.

The following list describes marketable securities:
Common stock – Shares of common stock represent ownership of a company, and they can be sold at any time on an exchange or over-the-counter market.

Preferred stock – Preferred shares give shareholders certain rights over common shareholders such as a fixed dividend rate, voting power and seniority in liquidation events.

Mutual fund shares – Mutual fund companies issue shares that represent ownership in a portfolio of stocks or bonds managed by an investment firm. Funds may be open-ended or closed-end vehicles with varying degrees of liquidity depending on their structure (i.e., whether they can issue new shares or not).

Bond – A bond is a fixed income instrument where an investor loans money to an issuer for a set period of time at an agreed interest rate known as the coupon rate. Bonds are issued by governments, corporations e.t.c.
 

Jasz

VIP Contributor
Marketable securities are financial instruments that can be converted into cash quickly and easily, such as stocks and bonds. These types of securities are often considered to be liquid assets because they can be sold easily by the owner. Marketable securities may be held in a brokerage account or in a bank account. When you place marketable securities in your brokerage account, you can sell them at any time without having to wait for a buyer.

However, if you place marketable securities in your bank account, they will not earn interest until you sell them. Types of Marketable Securities There are many different types of marketable securities available to investors. The most common type of marketable security is a stock, which represents ownership in a company and entitles the holder to profits through dividends and capital gains when the share price rises above its purchase price. If a company goes bankrupt or declares bankruptcy, however, shareholders lose all their money invested in that company's stock. Bonds represent debt owed by an entity such as a corporation or government agency.

The issuer of the bond pays interest on these debts periodically, usually twice per year for corporate bonds and once every six months for government bonds; some corporate bonds pay interest every three months due to seasonal fluctuations.
 
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