When you meet someone in an abandoned parking lot to sell a suitcase full of stolen game-used jock straps from NBA players, you are likely to demand cash. No names. No paperwork.
However, for other commerce, a negotiable instrument represents a useful alternative. If you legitimately buy your game-used jock straps from the NBA players, complete with bills of sale and all the other legal niceties, you're happy to accept other forms of payment. A personal check, for instance...that represents the most common negotiable instrument.
The term refers to any document that guarantees payment of an amount of money. It typically designates the payer and the payee, and promises to provide cash on demand. It prevents people from having to carry around large chunks of cash all the time.
It's negotiable because, if needed, it can be signed over to someone else. Or, in the case of the check, it can be deposited in the bank, or exchanged for cash (though your bank might have rules about whether it will cash a check without deducting some fee).
Related or Semi-related Video
Finance: What is mark to market?2 Views
Finance a la shmoop what is mark-to-market?
alright well Google was private for a long time before it went public public [Google timeline appears]
mutual funds bought the shares of the company when it was private, the company
did a few later stage B C and D rounds before going public in 2004 and each
iteration those subsequent rounds valued the company more highly so a mutual fund
invested say 20 million dollars in the B round they would have seen the C round
done at maybe double the valuation and while that mutual fund would then
mark to market or mark up their twenty million dollar investment to now be
worth forty million dollars even though the stock of goog was not yet publicly
traded and then it came along the D round which was done at triple the [D round investment appears]
valuation of the C round so then those shares of goog would have to be again
marked up or marked to the new current market valuation which was three times
the previous rounds valuation of 40 million aka a hundred twenty million
bucks today eventually the company did go public and there was no longer need [Google stock price rises on graph]
to mark its value to the market because well the market valued it basically
every second of the trading day if you want to learn more about all this stuff
well then you can just you know google it
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