{"id":6099,"date":"2021-10-25T00:55:06","date_gmt":"2021-10-24T23:55:06","guid":{"rendered":"https:\/\/www.simtrade.fr\/blog_simtrade\/?p=6099"},"modified":"2021-10-25T00:55:06","modified_gmt":"2021-10-24T23:55:06","slug":"marketable-securitites","status":"publish","type":"post","link":"https:\/\/www.simtrade.fr\/blog_simtrade\/marketable-securitites\/","title":{"rendered":"Marketable Securitites"},"content":{"rendered":"

Marketable Securities<\/h1>\n

\"Shruti<\/a><\/p>\n

In this article,\u00a0Shruti Chand<\/a>\u00a0(ESSEC Business School, Master in Management, 2020-2022) elaborates on the concept of\u00a0marketable securities.<\/i><\/p>\n

This read will help you get started with understanding\u00a0marketable securities on the balance sheet of a business.<\/p>\n

Introduction<\/h2>\n

Marketable securities are financial instruments that can be converted into cash easily by the firm. Marketable securities are recorded in the balance sheet along with other current assets because of their nature. You can find marketable securities on a firm\u2019s balance sheet under the Cash and cash equivalents section.<\/p>\n

Types of marketable securities:<\/strong><\/span><\/p>\n

There are various types of marketable securities available to the firm and that can appear in its balance sheet. The most common ones are:<\/p>\n

Bankers acceptances<\/strong><\/p>\n

Bankers acceptance bills can be imagined as an instrument that functions like a post-dated cheque. The business which purchases a banker\u2019s acceptance note can use this instrument to convert it into cash, with the bank guaranteeing the payment. The bank issues these cheques in exchange of a fee, i.e. issues it at a discount to a face value to the company.<\/p>\n

Commercial paper<\/strong><\/p>\n

Commercial Paper (CP) bought by a company refers to a short-term and unsecured debt instrument issued by other companies. The maturity of commercial papers can be as short as a few days to 270 days typically. Again, just like banker\u2019s acceptance, commercial papers are issued at a discount on the face value.<\/p>\n

Certificate of Deposits<\/strong><\/p>\n

Certificate of Deposits (CD) are issued by banks that provide interest on their value. Most financial institutions offer these certificates with a blocked period in which the certificate holder keeps the certificate untouched. The institution also levies a penalty in case of early withdrawal.<\/p>\n

Treasury Bills<\/strong><\/p>\n

Treasury Bills (T bills) are similar to certificates of deposits, but are issued by governments with maturity of one year or less. They are usually issued in fixed denomination at a discount on the face value. They are considered as one of the safest forms of investment and the discount rate is referred to risk free rate of the country.<\/p>\n

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Final Words:<\/h2>\n

Marketable securities are important as they can be sold on short notice to meet the financial obligation of the firm (to pay salaries to employees, to pay bills to providers, etc.).<\/p>\n

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Relevance to the SimTrade certificate<\/p>\n

This post deals with\u00a0Marketable Securities on\u00a0the balance sheet, an important tool for investors to take investment decisions.<\/p>\n

About theory<\/p>\n