Posted in Finance, Accounting and Economics Terms, Total Reads: 83
Non-Security is a financial or non-financial product which is very illiquid and not commonly traded in the market compared to other securities such as stocks, bonds, treasury bills and commercial papers.
There are serious challenges for such type of instruments are as they are illiquid it is very difficult to encash them before the maturity period and for some there may be no maturity period and may be bought at the buyers risk as there may be no specific market for it.
There are also no trustworthy guarantor for such products who can back upon for its trading.
Negotiations in this type of instruments are also very hard to make because there may be very less or no buyers for that product.
Non security products may include items like precious stones, paintings, collectible items, stocks and bonds of poor performing companies or defaulted companies.
Buying products of such type makes the investment risky but it can sometimes lead to a huge returns for it.For example: a rare painting or precious stone bought at low price by investor can bring huge return if he finds a correct buyer for it who is interested in collecting the valuables.