Marketable securities
management
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TOPIC PREVIEW
What is marketable securities
Reasons for holding marketable securities
Factors in choosing marketable securities
Types of marketable securities
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LEARNING OBJECTIVES
Students will be able to:
know what is marketable securities and
why it is important
choose the right marketable securities
Identify the various types of marketable
securities
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What is marketable securities?
Security investments
liquid assets.
short-term investment
sold on short notice
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Reasons for holding marketable
securities
1) substitute for cash
2) temporary investment
-finance seasonal or cyclical operations
-meet some financial requirements
-just sold long-term securities.
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Factors to be considered before choosing
/ buying Marketable Securities
Look at the different types of risk
Liquidity
Yield
Taxability
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Factors to be considered before choosing /
buying Marketable Securities
1. TYPES OF RISKS
i) Default Risk
ii) Event risk
iii) Interest rate risk
iv) Financial risk
v) Purchasing power of inflation risk
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Factors to be considered before choosing /
buying Marketable Securities
2. LIQUIDITY
A ready market security – it is
important for a firm to hold a
security that can be sold quickly.
A security that can be sold without
loosing too much ( i.e. selling price
is near the buying price )
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Factors to be considered before choosing
/ buying Marketable Securities
3. Yield (return on securities)
4. Taxability
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Types of marketable securities
Malaysian Govt Securities (MGS)
Malaysian Govt Treasury Bills (MGTB)
Negotiable Certificate of Deposit (NCD)
Investment Certificate
Cagamas Bond
Commercial Paper
Bankers Acceptance (BA)
Repurchase Agreement (REPOs)
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