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Cash Equivalent

A short-term money market instrument with high liquidity and safety that can be quickly turned into cash, such as a Treasury bill or repurchase agreement. Generally cash equivalents are investment instruments with good credit quality and high liquidity that are designed for short-term investing. Along with stocks and bonds, cash equivalents, usually referred to as "cash and equivalents," is one of the three major asset classes in financial investing. The risk and return characteristics of these securities are minimal.


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