Question

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):
a. Short-term marketable equity security.
b. Operating activity.
c. Common stock.
d. Cash equivalent.
e. Financing activity.

Answer 1

Answer:

d. Cash equivalent.

Explanation:

Based on the information provided within the question it can be said that the investment term being described are called cash equivalents. This is one of the three main asset classes within financial investing, with stocks and bonds. Like mentioned in the question it refers to to an investment securities as short term investments that are highly liquid. Such examples include commercial paper and treasury bills.