You can sell it. If a security is marketable, there are (at least notionally) buyers for it.
Public securities with no 144a restriction or IPO lock up or other restriction...because you, the owner, are an insider with inside information...are marketable. Or even if those restrictions apply and then your company lawyer confirms that you are clear to trade, then those securities are marketable. You can ask your broker to market them, or "ask" for a price, and voila!...they get sold.
Private securities are a whole other matter. Many are sellable notionally, but the company provides no information about the financial performance (so what outsider would then have any idea what to pay for them?). Or the private shares carry ROFRs, or rights of first refusal, for the company to buy them back before any outside party can buy them. They're still then notionally marketable, but like the Facebook relationship status, you'd tag those securities: "It's Complicated."
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Finance: What are Securities?39 Views
finance a la shmoop. what are securities? remember Linus? if not ask your parents.;
if you don't remember who the peanuts were, well then Linus was the guy always [man on stage]
carrying the blankie. and always sucking on his thumb .yeah ew gross .the blanket
was his security yeah see where we went with that his blanket was a something
that he relied upon, leaned on, nurtured. it was certainty, it was Bank. that secure
you see in the beginning of security? well it's not there by accident, so
financially speaking a security secures money. or at least value. when you buy a [100 dollar bill]
security, you give money to someone or something like a corporation. and in
return you get a promise of some value. securities come in two flavors generally
the first is equity ,or ownership. a share of stock is a security entitling you to
whatever percentage ownership and that company the share represents. like if you
bought 500 shares in a company with ten million shares outstanding well that
security represents ownership of five hundred divided by ten million or point [pie chart]
zero zero zero zero five percent of the company.
so that's equity. there's also debt as a security. that's the second thing. like
bonds the bond that Apple offered at four percent yield that pays off in ten
years? yeah that's a bond security. and note [woman sits behind computer]
that securities can carry different guarantees. that is the underlying
promise that the security represents or secures different elements. like a senior
bond security secures that those bonds will be paid off ahead of junior bonds
which will be paid off before say subordinated junior debentures. so you
can see that there are multiple classes and flavors and types of securities all
falling under this tent, which fortunately for everyone doesn't smell
like it's been sucked for four years. good grief. come back next [Linus holds his blankie]
time for another finance lesson a la shmoop and hopefully he'll have washed
this thing by then.
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