What are marketable securities?

Marketable securities are defined as short-term, highly liquid investments that can be easily converted into cash. They are typically traded on public exchanges or through over-the-counter markets, which facilitates their quick purchase or sale. These securities can include stocks, bonds, or other financial instruments that have a market price and can be quickly turned into cash with minimal loss of value.

The characteristic of being highly liquid is essential because it implies that these investments can be readily sold or liquidated in the market without significantly affecting their price. This liquidity is particularly advantageous for businesses and individuals seeking to maintain a cash reserve or to quickly access funds.

While long-term investments could generate income, and real estate investments typically appreciate in value, these do not fit the definition of marketable securities due to their lack of immediate liquidity and marketability. Furthermore, while risky assets with high volatility may be marketable, they do not encompass the full definition or characteristics that define marketable securities specifically. Therefore, the emphasis on short-term and liquidity is what makes the selected answer accurate.