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LSDefine
Simple English definitions for legal terms
marketable security
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A quick definition of marketable security:
A marketable security is something that shows you own a part of a company or government, like a stock or bond. It doesn't have any value on its own, but its value depends on how well the company or government is doing. It's like having a ticket to a concert - the ticket doesn't have any value on its own, but it lets you go to the concert, which is what makes it valuable.
A more thorough explanation:
A marketable security is a type of investment that can be easily bought and sold on a financial market. It is a type of security, which is an instrument that shows ownership or creditor rights in a company or government.
Examples of marketable securities include:
- Stocks: These represent ownership in a company and can be bought and sold on a stock exchange.
- Bonds: These represent a loan to a company or government and can be bought and sold on a bond market.
- Options: These give the holder the right to buy or sell a security at a certain price and can be bought and sold on an options market.
The value of a marketable security depends on various factors, such as the financial health of the company or government that issued it, and the demand for it in the market. For example, if a company is doing well, its stock price may go up, making it more valuable for investors to buy and sell.
Overall, marketable securities are a way for investors to make money by buying and selling ownership or creditor rights in companies or governments.