Question

A cash equivalent is:____.
A. An investment readily convertible to a known amount of cash.
B. Close to its maturity date but its market value may still be affected by interest rate changes.
C. Generally within 3 years of its maturity date.
D. Is not considered highly liquid.E. Another name for cash.

Answer 1

Answer: A. An investment readily convertible to a known amount of cash.

Explanation:

A cash equivalent is referred to as the investment that's readily convertible to a known amount of cash.

Cash equivalents include marketable securities that has a maturity of less than 90 days and bank accounts. Examples of cash equivalents are treasury bills, commercial paper, etc.