A cash equivalent is an investment that:
A)Is readily convertible to a known amount of cash.
B)Is sufficiently close to its maturity date so its market value is unaffected by interest rate changes.
C)Generally is within 3 months of its maturity date.
D)Is highly liquid.
E)All of the choices are correct.

Question

Quizplus · Accepted Answer

A cash equivalent must meet all of the criteria listed in the answer choices, which includes being readily convertible to cash, having a maturity date within three months, being unaffected by interest rate changes due to its short-term nature, and being highly liquid. Therefore, all of the choices are correct when identifying a cash equivalent investment.

A Cash Equivalent Is an Investment That