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Question 12I

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Essentials Of Investments
Found in: Page 50
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

Short Answer

Why are money market securities sometimes referred to as “cash equivalents”?

Money market securities are referred to as cash equivalents because they are highly liquid.

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Step by Step Solution

Definition

Money market securities are very short term debts which are highly marketable and carry a lower risk.

Explanation

Money market securities are sometimes referred to as “cash equivalents” because of the great liquidity they offer. The prices of such securities are very stable and hence they can be easily converted to cash at a very short notice.

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