Calvin (Cal) Boender, owner of North Development Company in Chicago, has directed the firm's investments since its inception. In 2006, Calvin Boender oversaw its diversification into cash-equivalent investments.
2. Calvin (Cal) Boender, owner of North Development
Company in Chicago, has directed the firm's
investments since its inception. In 2006, Calvin
Boender oversaw its diversification into cash-equivalent
investments.
A cash equivalent describes an investment that is
close to availability for withdrawal. To be considered
a cash equivalent, an investment must be easily
convertible to cash revenue, which means that any
maturity date must be within three months of the
product's classification, as there is little chance of
devaluation within that period.
3. Common cash equivalent products in
today's market include commercial paper,
money market funds, and Treasury bills.
Money market funds tend to be the simplest
to understand, as they function much like
checking accounts, though with higher
interest. By contrast, commercial paper is a
notes-receivable product, although it
reaches maturity in under 270 days,
meaning that commercial paper becomes
cash equivalent faster than many other
products.
4. Similarly, Treasury bills come from the US
Treasury and mature in a maximum of
one year. A business or individual may
invest in one or more of these products
to attempt to secure returns from
otherwise nonproducing cash reserves.