Marketable securities are highly liquid short-term financial instruments issued as either equity or debt instruments. Marketable securities generally include corporate and government bonds, common stock form publicly traded companies, and derivative instruments that are readily tradeable.

Marketable securities generally have the following characteristics:

  • A maturity period of 1 year or less
  • The security can be bought or sold on a public exchange
  • The security is NOT cash or a cash equivalent
  • The investment offers a lower rate of return

A company can record marketable securities on its balance as one of three different classifications. Those three classifications include:

  1. Available for Sale Securities
  2. Held for Trading Securities
  3. Held to Maturity Securities