What are Marketable Securities?
Marketable securities are financial instruments that can be easily bought or sold in the market due to their high liquidity. These securities are readily tradable, allowing investors to convert them into cash quickly. Common examples of marketable securities include:
1. Treasury Bills: Short-term debt securities issued by governments, typically with maturities of one year or less.
2. Commercial Paper: Short-term debt issued by corporations to meet short-term obligations. It is often unsecured and has maturities ranging from a few days to several months.
3. Money Market Instruments: Short-term debt instruments like certifications of deposit (CDs) and repurchase agreements (repos) that are traded in the money markets.
4. Equity Securities: Shares of publicly traded companies that can be easily bought or sold on stock exchanges.
Marketable securities are a crucial component of investment portfolios, providing liquidity and flexibility for investors to react to changing market conditions.
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