Cash Equivalents

In finance, cash equivalents (along with cash itself) are one of the principal asset classes. Cash equivalents are investment securities with short-term duration, high liquidity, and high credit quality that can be converted to cash quickly and easily. Cash equivalents must have maturities of three months or less. Money market instruments (a type of marketable security) often qualify as cash equivalents because they are liquid, short-term, and not subject to material fluctuations in value.

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