Cash Equivalents are high-quality investments designed for short-term investment. This means that you don’t plan to hold on to them for very long, which is why they are considered short-term investments. Some good examples of cash equivalents include: money market accounts, treasury bills, and certificates of deposit. Cash equivalents provide a safe and liquid investment opportunity that you can use to quickly access your money. They’re also a good way to bridge the gap between short-term and long-term investments; this is especially true if you’re saving money for an upcoming purchase, like a house or car.Cash equivalents are not very risky because they’re very liquid. They will not lose value as fast as long-term investments can, but they also won’t do as well as long-term investments in the long run.Cash equivalents are low-risk, low-return investments. They’re a good place to put your money if you don’t plan on investing it for very long , and if you don’t want to risk losing your money.Cash equivalents and stocks are considered to be the most liquid assets, meaning that you can easily convert them into cash. The most liquid assets also have the smallest bid-ask spreads. The bid-ask spread is the difference between what you pay and what you get when you buy or sell an asset. The smaller the spread, the easier and cheaper it is to trade an asset in the market.
