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3 pages/≈825 words
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Accounting, Finance, SPSS
Research Paper
English (U.S.)
MS Word
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Why do companies hold marketable securities? Research Paper (Research Paper Sample)


Individual Research Question
Each student will be assigned a research question to prepare a report. The length of the report will be a maximum of three (3) pages explaining an answer(s) to the assigned question. The answer will be handed in at the assigned class. This answer(s) is meant to cover a research review of the topic, any important definitions and how it is important to working capital management.


Why Do Companies Hold Marketable Securities?
Institutional Affiliation
Why Do Companies Hold Marketable Securities?
Marketable securities refer to liquid financial instruments that when deemed necessary, the investor can convert them into cash and at a reasonable price (Kenton, 2019). A company undertakes investments in marketable securities when it has surplus cash flow. Moreover, idle cash is a significant liability for the firm. If underutilized, the firm loses income from unmade investment or in other circumstances, it incurs interest charges on funds it borrows. Holding surplus cash is a disadvantage for the company, particularly, during inflation because it the cash loses value. Investing in marketable securities demands an intricate balance between the risk and return of investing in securities. Efficient managers have to be keen on maintaining this balance so that their actions do not result in losses. Barring these consequences, companies seek to hold marketable securities for transaction motives, safety, and speculative purposes rather than keeping idle cash.

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