A) Earnings substitutes
B) Cash substitutes
C) Income substitutes
D) Other than those given as options
E) Liability substitutes
Correct Answer: B
Solution :
Cash substitutes refer to short-term, highly liquid investments that are both [a] readily convertible to known amounts of cash and [b] near their maturity that they present insignificant risk changes in value because of changes in interest rate. Also known as Money Market Instruments, such investment include: treasury bills, municipal notes, certificates of deposit/commercial paper, etc.
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