Cash equivalents are short-term investments that are highly liquid and can be readily converted into cash.

Name: Cash equivalents are short-term investments that are highly liquid and can be readily converted into cash.
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Cash equivalents, such as money market funds, treasury bills, and commercial paper, are easily convertible to cash and have a maturity date of three months or less. Therefore, they are considered highly liquid short-term investments.

Cash Equivalents Are Short-Term Investments That Are Highly Liquid and Can