A cash equivalent is an investment that:
A) Is readily convertible to a known amount of cash.
B) Is subject to an insignificant risk of changes in value.
C) Is within 3 months of its maturity date.
D) Is highly liquid.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

All of these answers are correct. A cash equivalent must be readily convertible to a known amount of cash, be subject to an insignificant risk of changes in value, have a maturity date of within 3 months, and be highly liquid. Therefore, all of the options listed are required for an investment to be considered a cash equivalent.

A Cash Equivalent Is an Investment That