An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):
A)Short-term marketable equity security.
B)Operating activity.
C)Common stock.
D)Cash equivalent.
E)Financing activity.

Question

Quizplus · Accepted Answer

A cash equivalent is an investment that is readily convertible to a known amount of cash and has a maturity date of three months or less. Since it is close to maturity, its market value is unlikely to be affected by interest rate changes.

An Investment That Is Readily Convertible to a Known Amount