Certified Anti-Money Laundering Specialist (CAMS) 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 455

What distinguishes cash equivalents from other forms of assets?

They have low liquidity

They are easily convertible to cash

Cash equivalents are defined by their high liquidity, meaning they can be easily converted into cash with little to no loss in value. This distinguishing characteristic is what sets them apart from other asset types. Examples of cash equivalents include treasury bills, money market funds, and short-term government bonds, all of which can be quickly liquidated to meet immediate cash needs.

Other forms of assets may not share this feature; for instance, real estate or stocks can take longer to sell, and there might be fluctuations in their market value during the sale process. Thus, the ability to rapidly and effortlessly convert cash equivalents into cash is crucial for businesses and individuals who need to manage liquidity effectively. This unique attribute makes cash equivalents an essential component of financial management and investment strategies.

Get further explanation with Examzify DeepDiveBeta

They are high-risk investments

They take time to liquidate

Next Question

Report this question

Download Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy