Your business partner has proposed you to join him (her) in investing $100000 each in a new enterprise. assume that you have tha
t amount of money available. in case of success your return is $40000 but in case of failure you lose $20000. your analysis shows P40=0.3 of success and P-20=0.7 of failure. would you invest?what is your investment risk preference and analysis?
Because they represent short-term investments that a company makes with the goal of getting rid of any excess cash that would otherwise be left unused while it is losing value because of inflation.
In other words, the main goal of investments in money market funds and three-month treasury bills, is to prevent cash from losing value due to inflation, and because of that, those investments are considered cash equivalents.
