In order to be classified as a cash equivalent, an investment must have a maturity date of

A) less than six months
B) three to six months
C) six to twelve months
D) three months or less

Question

In order to be classified as a cash equivalent, an investment must have a maturity date ofA) less than six monthsB) three to six monthsC) six to twelve monthsD) three months or less

Kurtis Klingbeil · Accepted Answer

Final Answer : D, Explanation :  Cash equivalents are highly liquid assets that can be easily converted into cash within a short period of time, typically with a maturity date of three months or less. Therefore, the best choice is D, which indicates a maturity date of three months or less. Choices A, B, and C have maturity dates that are too long to be considered as cash equivalents.

In order to be classified as a cash equivalent, an investment must have a maturity date of

A) less than six months
B) three to six months
C) six to twelve months
D) three months or less

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Learning Objectives

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