Investopedia

Digested Security

Filed Under »
Dictionary Says

Definition of 'Digested Security'

A digested security is a financial instrument which an investor has bought and intends to hold for a long period of time. The security is thus effectively taken out of trading. If a large number of investors choose to digest a particular security, then it can result in a relatively illiquid market for that security, making it difficult to buy or sell.
Investopedia Says

Investopedia explains 'Digested Security'

The illiquidity caused by digested securities poses a frequent problem in certain markets. This dilemma is particularly prevalent in the bond market, for example, where many bonds end up in the hands of investors who wish to hold them until maturity. It is common for a particular bond issue to experience a steadily decline in trading volume, as the securities are gradually digested by investors who wish to hold them to maturity.

Articles Of Interest

  1. Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  2. The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  3. Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  4. ETF Liquidity: Why It Matters

    Lower levels of liquidity in exchange-traded funds make it harder to trade them profitably.
  5. Common Bond-Buying Mistakes

    Avoid these errors made daily in bond portfolios everywhere.
  6. Lenovo Still Far From Getting Its Due

    Lenovo's leading share in emerging market IT seems undervalued.
  7. How Line of Credit Works

    A line of credit is an arrangement where a bank offers a maximum loan amount that the borrower can draw upon at any time. The borrower – which can be an individual, business or government ...
  8. Market Summary for May 24 2013

    The major U.S. indices moved lower this week, ahead of the long Memorial Day weekend. After reaching all-time highs last week, many traders attributed the sell-off to a combination of profit ...
  9. Ralph Lauren Q4 Earnings Up 35%: Buy or Sell?

    Ralph Lauren announced Q4 earnings that were 35% ahead of last year. Unfortunately, it also was very cautious on its 2014 revenue growth. Although its stock's had a good run in the past year ...
  10. Pandora Goes To Up To 11

    Pandora is showing that it can deliver on its model and its goals.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.
  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.
  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.
  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.
  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.
  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center