What does the term 'marketable security' refer to?

Marketable security refers to a financial instrument that can be easily converted to cash, typically because it is traded on a public exchange or in an active market where there is a ready buyer for it. These securities include stocks, bonds, and other financial instruments that have a high degree of liquidity.

The key attribute that defines marketable securities is the ease with which they can be bought or sold without causing a significant impact on their market price. This liquidity is essential for investors who may need to access cash quickly, making these instruments valuable for both short-term and long-term investment strategies.

Considering the other options, a security that cannot be sold does not fit the definition and would not qualify as a marketable security at all. A type of long-term bond may refer to a specific investment vehicle but does not encompass the broader definition of marketability. Finally, an equity investment in real estate is not typically considered a marketable security because real estate transactions are generally less liquid and involve more complexity compared to readily tradable securities. Thus, the correct interpretation revolves around the ease of converting these financial instruments into cash, which is why the first option is accurate.