What are marketable securities?


Quick Answer

Marketable securities are liquid securities or debts that can be quickly converted into cash without greatly affecting their value. Marketable securities include treasury bills, commercial paper and banker's acceptances. Part of their liquidity is that marketable securities have less than a year to reach maturity.

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Full Answer

Cash is the most common form of marketable securities, usually banked in a checking or savings account for fast access. The most common form of marketable securities after cash is marketable equity securities, such as most preferred stocks and common stocks. These can generally be liquidated on the open market, giving the stockholder an immediate cash return. Government and corporate bonds are considered marketable debt securities because of the ease of liquidation on the bond market.

Marketable securities are used primarily to store cash for quick future access. If the cash is converted into securities or bonds, then this is usually done to invest the funds in a way that generates a profit while waiting for use. Banks and other financial institutions invest heavily in marketable securities to ensure that they have quick access to capital in case it's needed. In a company's valuation of marketable equity securities, they are listed on the books at the cost of the security or at the present market value, whichever is lower. The value is adjusted when the securities are sold.

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