Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam 2025 - Free CAMS Practice Questions and Study Guide

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What defines cash equivalents?

Investments that provide high returns

Items that instantly increase a customer's bank account balance

The definition of cash equivalents pertains specifically to assets that are highly liquid and can be readily converted into cash without a significant loss in value. Therefore, the most relevant choice is one that refers to items that can instantly increase a customer's bank account balance. Cash equivalents typically include things like short-term investments, government bonds, and money market funds that are easily converted to cash and available for immediate use.

The other options, while related to financial assets, do not accurately describe cash equivalents. High-return investments do not guarantee liquidity or instant access to funds. Physical cash on hand is better classified simply as cash rather than an equivalent. Long-term investment assets are not easily liquidated and are meant to be held for a longer duration, making them unsuitable to be categorized as cash equivalents.

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Physical cash on hand

Long-term investment assets

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