If a firm wishes to invest cash that might be needed at short notice in the very near future,they would be most likely to invest in which of the following securities?
A)cash management bills
B)certificates of deposit
C)repurchase agreements
D)banker's acceptances
E)commercial paper

Question

Quizplus · Accepted Answer

Cash management bills are short-term securities with maturities ranging from a few days to a few weeks. They are issued by the US government to raise short-term funds to meet its cash requirements. They are highly liquid and can be easily sold in the secondary market. Since they have a very short maturity period, they are ideal for firms that require cash at short notice. Certificates of deposit, repurchase agreements, banker's acceptances and commercial paper all have slightly longer maturity periods and may not be as suitable for firms that require immediate access to cash.

If a Firm Wishes to Invest Cash That Might Be