Final answer:
Short-term high liquid investments refer to money market instruments with maturities of 3 months or less, allowing quick conversion to cash without substantial loss in value.
Step-by-step explanation:
Short-term, highly liquid investments with maturities of 3 months or less are commonly referred to as money market instruments. Examples include treasury bills, certificates of deposit, and commercial paper. These instruments are characterized by their ability to be quickly converted to cash on the market with minimal impact on their value. This high liquidity makes them ideal for investors who prioritize maintaining a flexible and easily accessible portfolio.
Treasury bills are short-term government securities, certificates of deposit represent time deposits with banks, and commercial paper is a short-term debt instrument issued by corporations. The appeal of money market instruments lies in their safety, stability, and the convenience they offer for meeting short-term liquidity needs while preserving capital. Investors often incorporate these instruments to balance risk and liquidity in their overall investment strategy.