ACCA Financial Management (F9) Certification Practice Exam

Which type of securities can be resold in the financial markets?

1. Non-negotiable Securities

2. Convertible Securities

3. Negotiable Securities

4. Hybrid Securities

The correct answer is: Negotiable Securities

Negotiable securities are financial instruments that can be transferred and sold in the financial markets. This characteristic allows holders to create liquidity, as they can sell these securities to other investors without significant restrictions. Common examples include stocks and bonds that are listed on exchanges, which can be bought and sold freely. Non-negotiable securities, on the other hand, cannot be easily transferred or resold in the market. This limitation makes them less attractive for investors seeking liquidity. Convertible securities, while they can eventually be converted into equity, do not directly pertain to the ability to be resold in their original form. They might have conditions that restrict their transferability until certain triggers are met. Hybrid securities combine characteristics of both debt and equity but do not inherently refer to their negotiability in markets. Their ability to be resold depends on their specific features and market conditions, rather than defining them strictly as negotiable. Thus, the term "negotiable securities" explicitly covers those financial assets designed for trading, allowing for seamless transactions between investors in the financial markets. This makes it the correct choice in the context of reselling securities.