Principles of Finance

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Marketable securities

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Principles of Finance

Definition

Marketable securities are liquid financial instruments that can be quickly converted into cash at a reasonable price. They are typically short-term investments, such as Treasury bills, commercial paper, or money market instruments.

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5 Must Know Facts For Your Next Test

  1. Marketable securities are considered part of a company's working capital.
  2. They provide liquidity to meet short-term obligations.
  3. Common types include Treasury bills, commercial paper, and certificates of deposit.
  4. Marketable securities are recorded on the balance sheet under current assets.
  5. They help companies manage excess cash efficiently and earn returns.

Review Questions

  • What are marketable securities and where are they recorded on the balance sheet?
  • Why are marketable securities considered a part of working capital?
  • Name three common types of marketable securities.
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