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MARKETABLE SECURITIES

Discuss MARKETABLE SECURITIES within the Financial Management ( FM ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; MARKETABLE SECURTIES MEANING The finance management after having determined the optimum level of cash balance directs these liquid assets to ...

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MARKETABLE SECURITIES
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Sunanda K. Chavan
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MARKETABLE SECURITIES - September 13th, 2010

MARKETABLE SECURTIES

MEANING


The finance management after having determined the optimum level of cash balance directs these liquid assets to be invested in marketable securities. This securities are short term investment instrument, so that interest can be earned on temporarily idle funds. Hence marketable securities are the securities which can be converted into cash in a short period of time, say few days.


MONEY MARKET INSTRUMENTS
Gift-edged securities (central government securities)

The dictionary meaning of gift-edged is of the highest or best quality. Most government securities bond are known as gift-edged securities because government securities are of less risk.

STATE GOVERNMENT & PUBIC SECTOR INSTRUMENTS
The target market of this securities is mutual funds and insurance co. The tenure is 5-7 years to meet long term funding needs.

MUNCIPAL BONDS
This are the bonds which are raised by municipal bodies of local government for financing core urban infrastructure facilities like drinking water, sanitary system, solid waste disposal systems, roads, hospitals etc.

TREASURY BILLS
Treasury bills are issued by the government for the period ranging from 91 days to 364 days through regular actions. The demand for it is from banks, financial institutions & corporations. These are highly liquid instruments. These are issued by RBI on behalf of the government of India to tick over short liquidity shortfalls.

RE-PURCHASE AGREEMENT (REPOS)
These are generally done by commercial banks. ”Repos” arise were one party sells a security to another party with agreement to buy it back at a specified time and price. The period generally rises 1 day to 14 days.


CERTIFICATE OF DEPOSITS (CDs)
These are deposits with the bank for the fixed period of time. These have fixed rate of interest. These are similar to commonly available fixed deposits. But FDs are non-transferable while CDs can be transferred from 1 party to another.

COMMERCIAL PAPER(CPs)
It is short term Unsecured promissory note with a fixed maturity period and generally issued by leading, nationally reputed, credit worthy & large business firms to raise cash.

CORPORATE DEBENTURES & BONDS
These are instruments issued by Pvt. sector companies for the period from 5-7 years for long term funding requirements.

INTER-CORPORATE DEPOSITS
It is a short term deposits with other companies. It is fairly attractive form of investment of short term funds in terms of rate of returns. It has high degree of risk and also it takes 1 month to convert than into cash.

BILLS DISCOUNTING
Bill of exchange is self liquidity instrument and so is superior to inter-corporate deposits. Surplus funds are used to purchase/discount bills.

The seller of the goods draws a bill on the purchaser. The usage period is normally 90 days. On acceptance of the bill by the purchaser, the seller offers it to the bank for discount/purchase and the bank discount/purchase the bill. It releases the funds to the seller.
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Rose Marry
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Re: MARKETABLE SECURITIES - April 12th, 2016

Quote:
Originally Posted by sunandaC View Post
MARKETABLE SECURTIES

MEANING


The finance management after having determined the optimum level of cash balance directs these liquid assets to be invested in marketable securities. This securities are short term investment instrument, so that interest can be earned on temporarily idle funds. Hence marketable securities are the securities which can be converted into cash in a short period of time, say few days.


MONEY MARKET INSTRUMENTS
Gift-edged securities (central government securities)

The dictionary meaning of gift-edged is of the highest or best quality. Most government securities bond are known as gift-edged securities because government securities are of less risk.

STATE GOVERNMENT & PUBIC SECTOR INSTRUMENTS
The target market of this securities is mutual funds and insurance co. The tenure is 5-7 years to meet long term funding needs.

MUNCIPAL BONDS
This are the bonds which are raised by municipal bodies of local government for financing core urban infrastructure facilities like drinking water, sanitary system, solid waste disposal systems, roads, hospitals etc.

TREASURY BILLS
Treasury bills are issued by the government for the period ranging from 91 days to 364 days through regular actions. The demand for it is from banks, financial institutions & corporations. These are highly liquid instruments. These are issued by RBI on behalf of the government of India to tick over short liquidity shortfalls.

RE-PURCHASE AGREEMENT (REPOS)
These are generally done by commercial banks. ĒReposĒ arise were one party sells a security to another party with agreement to buy it back at a specified time and price. The period generally rises 1 day to 14 days.


CERTIFICATE OF DEPOSITS (CDs)
These are deposits with the bank for the fixed period of time. These have fixed rate of interest. These are similar to commonly available fixed deposits. But FDs are non-transferable while CDs can be transferred from 1 party to another.

COMMERCIAL PAPER(CPs)
It is short term Unsecured promissory note with a fixed maturity period and generally issued by leading, nationally reputed, credit worthy & large business firms to raise cash.

CORPORATE DEBENTURES & BONDS
These are instruments issued by Pvt. sector companies for the period from 5-7 years for long term funding requirements.

INTER-CORPORATE DEPOSITS
It is a short term deposits with other companies. It is fairly attractive form of investment of short term funds in terms of rate of returns. It has high degree of risk and also it takes 1 month to convert than into cash.

BILLS DISCOUNTING
Bill of exchange is self liquidity instrument and so is superior to inter-corporate deposits. Surplus funds are used to purchase/discount bills.

The seller of the goods draws a bill on the purchaser. The usage period is normally 90 days. On acceptance of the bill by the purchaser, the seller offers it to the bank for discount/purchase and the bank discount/purchase the bill. It releases the funds to the seller.
Hello Sunanda,

It was really appreciable and i am sure it would help many people. Well, i found Cash, Marketable Securities, and Receivables and wanna share it with you and other's. So please download and check it.
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File Type: pdf Cash, Marketable Securities, and Receivables.pdf (710.0 KB, 0 views)
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