Cash equivalents meet all of the following criteria except:

Question

Quizplus · Accepted Answer

Cash equivalents are short-term investments that are readily convertible to a known cash amount and have a maturity date of three months or less from the date of purchase. They are also highly liquid and low-risk investments. However, they may be sensitive to interest rate changes, which eliminates option A from being correct. Option E specifically mentions short-term U.S. treasury bills, which meet all of the criteria of cash equivalents, making it a correct answer. Option C is partially correct but not comprehensive enough to be the best answer. Option B is incorrect because cash is the most liquid asset, so cash equivalents cannot be more liquid than cash.

Cash Equivalents Meet All of the Following Criteria Except