What is one reason why short-term securities are safe for keeping idle cash balances?
A) Low interest-rate risk
B) High returns
C) High net present value
D) Ease of receiving interest payments

Question

Quizplus · Accepted Answer

Short-term securities typically have low interest-rate risk, meaning that changes in interest rates are unlikely to significantly affect their value. This makes them a safe option for keeping idle cash balances. While short-term securities may offer some returns, they are generally not as high as longer-term investments. Net present value and ease of receiving interest payments are not necessarily factors that make short-term securities safe for keeping idle cash balances.

What Is One Reason Why Short-Term Securities Are Safe for Keeping