[ad_1]
Cabinet bonds and stocks are publicly traded but have few trading assets. They are usually traded in small lots and are relatively stable. The origin of the name is unclear. Investors may choose to incrementally buy additional shares over time.
Cabinet bonds are bonds and stocks that are publicly traded but don’t have much in the way of trading assets. In general, there are far more bond issues classified as cabinet bonds than stock options. It’s not unusual for investors to own small lots of investments that fit into the government’s security model, although few investors choose to build their portfolio around these types of stocks and bonds.
One of the identifying characteristics of a cabinet stock is the number of shares that are usually included for sale in an offering. Unlike most investment options which trade lots of one hundred shares, a cabinet stock usually trades in much smaller lots. It’s not unusual for a cabinet stock to trade in a small lot, like ten shares. In some cases, a cabinet stock can be traded in one lot of up to five shares of stock.
The exact origin of the designation of these types of holding companies as cabinet titles is somewhat obscure. Some financial historians trace the name to the usual type of deposit for stock certificates that have been used by brokerage firms for decades. Because they entered the cabinet and rarely left, they came to be known as cabinet titles. A second theory for the origin of the name is in a similar vein, likening the storage of the safety to that of fine china in the home. Since fine china usually remains in the china cabinet except on rare and special occasions, the lack of frequent trade on cabinet safety was a natural connotation.
In general, cabinet stock tends to be a relatively stable bond or stock, so there’s no real motivation for the investor to want to buy or sell the stock at any given time. Instead, the investor may choose to incrementally buy additional shares as they become available, since a cabinet stock offers the ability to make a small profit over time.
Smart Asset.
[ad_2]