The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

What Is A Cash Equivalent Security ?

Cash equivalent investments are often called reserves. These represent short term loans ti high quality borrowers such as the U>S> Government. Examples of cash equivalent securities are Treasury bills and money market mutual funds. Cash equivalent investments offer stability of principal and high liquidity. Cash equivalent securities can be turned into cash easily and quickly. Due to the fact that risk is relatively low, the return on these investments is also relatively low.

If you need professional help with "Investments & Financial Planning" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.