Characteristics of Marketable Securities.The securities, which can be easily sold in the market or can be converted into cash at very short notice, are known as marketable securities i.e.
- Shares and debentures of companies
- NIT units
- Government Securities (Bonds, Certificates etc.)
Why Are Marketable Securities Important.Characteristics of Marketable Securities
- Easily Salable:
These securities can be easily sold in the market on cash basis.
- Transferability:
Generally, these securities are consisted of shares, bonds and certificates etc. So, their rights of ownership can be transferred easily.
- Safety:
Generally, these securities are in the form of papers or documents. So, they can be kept safely without any fear.
- Easy Valuation:
The value of quoted shares or debentures can be easily determined.
- Re-acceptance:
Commercial bank can re-present these securities to central bank for obtaining loan.
- Durability:
These securities are durable because of minimum chances of damages.
- Confirm Rights of Ownership:
The rights of ownership of borrower on the securities are very cleared, which prove helpful in selling them without any dispute.
- Stable Prices:
Normally, the prices of these securities remain stable.
9.Source of Income:
These securities earn profit or interest during the period of loan. Moreover, the bank can be benefited due to increase in prices of securities.
- Trustworthy:
The securities are trust worthy for advancing loan due to their physical existence.
- Low Cost of Storage:
These securities can be stored at lowest storage cost.
- Sale Expenses:
The expenses on the sale of marketable securities are very less as compared to other securities (i.e.,) land and building etc.