A Cash Equivalent Is an Investment That

question 120

Multiple Choice

A cash equivalent is an investment that:

• A) Is readily convertible to a known amount of cash.
• B) Is sufficiently close to its maturity date so its market value is unaffected by interest rate changes.
• C) Generally is within 3 months of its maturity date.
• D) Is highly liquid.
• E) All of these.

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Definitions:

Outcome Probabilities

The likelihoods associated with the possible outcomes of a random process or experiment.

Intuitive Judgment

The process of making a decision or reaching a conclusion based on what feels naturally right without explicit reasoning.

Objective Fact

Information verified to be true, independent of personal feelings or opinions.

Equal Alternatives

Options presented in a situation that are considered to have the same value or importance, allowing for a choice without preference.