Which of the following describes a cash equivalent?
A) A somewhat liquid investment held to meet short or medium-term cash commitments that act as a hedge against market volatility.
B) A highly liquid investment held to meet long-term cash commitments rather than for investment or other purposes
C) A short-term investment that is highly liquid and subject to an insignificant risk in changes in value.
D) A highly liquid, readily-convertible, investment with an available market price used for long-term investments.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, making option C the correct description.

Which of the Following Describes a Cash Equivalent