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 relatively insensitive to 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

The investment that is described in the question is a cash equivalent, as it is readily convertible to a known amount of cash and its value is not significantly affected by changes in interest rates. The other choices are not applicable in this scenario - short-term marketable equity securities and common stock are not necessarily close to maturity and may be subject to significant fluctuations in value, while operating activities and financing activities refer to broader categories of business activities, rather than specific investments.

An Investment That Is Readily Convertible to a Known Amount