Under certain conditions,an investment in common stock can be considered a cash equivalent.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so close to their maturity that they present insignificant risk of changes in value because of changes in interest rates. Common stocks do not meet these criteria as their value can fluctuate significantly and they cannot be easily converted to a known amount of cash in a short time frame.

Under Certain Conditions,an Investment in Common Stock Can Be Considered