Various types of short term investment opportunities, Managerial Accounting

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The subsequent short-term investment opportunities are obtainable to companies in India to invest their temporary cash excess.

a) Treasury Bills: Treasury Bills are short-term government securities; they are sold on a discount to their face value and redeemed at par on maturity. Their default risk is negligible and they are highly liquid instruments.

b) Commercial Papers: Commercial papers are short term, unsecured securities referred through huge companies and highly creditworthy. The maturity of these instruments ranges from fifteen days to one year. Such instruments are marketable thus they are liquid instruments.

c) Certificate of Deposits: Certificate of Deposits is papers referred by banks acknowledging fixed deposits for a particular period of time, they are negotiable instruments and it makes them liquid.

d) Bank Deposits: Firms can deposit excess or surplus cash in a bank for an era of time. The interest rate will base upon the maturity period. This is also a liquid instrument means that, in case of premature withdrawal merely a part of interest earned has to be foregone.

e) Inter-corporate Deposit: Companies consisting of surplus cash can deposit its funds in a sister or relate company or to another company with high credit standing.

f) Money Market Mutual Funds: Money market mutual funds invest in short-term marketable securities. These types of instruments have a minimum lock in period of 30 days and returns are generally two percent above that of bank deposits along with similar maturity.


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