Cash equivalents are financial instruments or investment securities that are held by an organization for the purpose of short-term investing. These assets are characterized by their high credit quality and exceptional liquidity, making them easily convertible into cash without a significant risk of loss in value. Cash equivalents typically have a short maturity period, often within three months or less from the date of acquisition. Examples of cash equivalents include Treasury bills, money market funds, and highly liquid marketable securities.
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