marketable security


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Related to marketable security: Debt security

Negotiable

A security that may be bought or sold. Generally, a negotiable security is traded on the secondary market, but the initial sale takes place on the primary market. Negotiable securities may be low-risk, such a Treasury bonds, or high-risk, such as stocks. They are also known as marketable securities. See also: Nonmarketable security.

marketable security

A security that may be resold by one investor to another. Most securities are marketable; they develop secondary markets for trading. Also called negotiable security.
References in periodicals archive ?
Market participants will always prefer a marketable security. The majority of discussions relating to DLOMs justify their application by saying that investors will always prefer a marketable instrument to an otherwise identical nonmarketable instrument Therefore, the value of the non-marketable instrument must be less than the value of an otherwise identical marketable instrument.
A nonmarketable security is equivalent to a marketable security less the ability to sell the security over the nonmarketable period.
* Marketability equivalence put option, where the nonmarketable security is equivalent to the marketable security less a put option with the length of the nonmarketable period and an exercise price equal to the fair value of the marketable security at the end of tire nonmarketable period.
* Marketability equivalence forward purchase agreement, where the nonmarketable security is equivalent to a forward contract to purchase the marketable security at a price of zero at the end of the nonmarketable period.
* Marketability equivalence collar, where the nonmarketable security is equivalent to the marketable security less a put option with the length of the nonmarketable period, plus a call option of equal length, with exercise prices equal to the fair value of the marketable security at the end of the nonmarketable period.
Since puts, calls, and forwards are typically priced under no-arbitrage conditions, it is not surprising that all the above equivalence relationships result in the fair value of the nonmarketable and marketable security being equal.