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Marketable securities are liquid financial instruments that can be quickly converted into cash at a reasonable price, typically within a year. They are used by companies and investors to manage short-term financial needs and to optimize the balance of risk and return in their portfolios.
Concept
Liquidity refers to the ease with which an asset can be converted into cash without affecting its market price. High liquidity in markets ensures that transactions can be executed quickly and with minimal price fluctuations, enhancing market stability and investor confidence.
Short-term investments are financial instruments that are designed to provide liquidity and are typically held for less than one year, offering a balance between risk and return. They are often used by investors to park funds temporarily while seeking opportunities for higher returns or to maintain cash flow flexibility.
Risk management involves identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events. It is essential for ensuring that an organization can achieve its objectives while safeguarding its assets and reputation against potential threats.
Cash equivalents are short-term, highly liquid investments that are easily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. They are typically used by companies to manage liquidity and ensure that they have sufficient cash on hand to meet immediate obligations.
Financial instruments are contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. They are essential for the functioning of financial markets, enabling the transfer of capital, risk management, and price discovery.
Market risk refers to the potential for financial losses due to movements in market prices, including equities, interest rates, currencies, and commodities. It is a critical consideration for investors and financial institutions as it affects portfolio value and financial stability, necessitating effective risk management strategies.
Concept
Yield refers to the income generated and realized on an investment over a particular period, expressed as a percentage based on the investment's cost, current market value, or face value. It is a critical measure for investors to assess the profitability and performance of their investments, influencing decisions across various financial instruments such as bonds, stocks, and real estate.
Capital markets are financial markets where long-term debt or equity-backed securities are bought and sold, playing a crucial role in the functioning of the economy by facilitating the transfer of capital between investors and businesses. They help in price discovery, liquidity, and risk management, and are essential for economic growth and development.
Current assets are short-term economic resources that are expected to be converted into cash, sold, or consumed within one year or within a business's operating cycle, whichever is longer. They are crucial for assessing a company's liquidity and ability to meet short-term obligations.
Cash and cash equivalents represent the most liquid assets on a company's balance sheet, including currency, bank deposits, and short-term investments that can be quickly converted into cash. These assets are critical for a company’s liquidity management, ensuring it can meet its short-term obligations and operational needs without financial strain.
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