Asset Classes

Cash

Acronym
Cash
Nickname
Money

Cash is legal tender that can be used to exchange goods, debt, or services. In a corporate setting, it may also include the value of assets that are easily convertible to cash like marketable securities, checks, or any other form of currency. The physical form of cash requires no extra processing. That is why it is the most broadly accepted and reliable form of payment in the market.

  • A country's base currency that can be used to purchase other goods or services
  • Can be held physical or electronic form
  • Cash held in bank accounts may also pay interest
  • Some investors include short-term, low-risk marketable securities in their calculation of cash
  • Cash often competes with:


Optionality of Cash

  • In times of uncertainty, it can make sense to hold cash
  • The opportunity of cash is low - it gives holders the option to buy other investments or assets whenever they like