Short-Term Portfolios

C

Short-term portfolios are investment portfolios that consist of assets that mature in less than one year and are designed to meet short-term liquidity needs. The correct answer to this question is C - Portfolios consisting of assets with maturities of less than one year to meet liquidity needs.

Short-term portfolios are typically used by individuals, corporations, and financial institutions to manage their short-term cash flow needs. These portfolios are designed to provide investors with quick access to cash and are typically low-risk investments.

Examples of assets that can be included in short-term portfolios include:

1. Money market funds: These are mutual funds that invest in low-risk, short-term debt securities such as Treasury bills, commercial paper, and certificates of deposit.

2. Treasury bills: These are short-term debt securities issued by the U.S. government with maturities ranging from a few days to one year.

3. Commercial paper: This is a type of unsecured short-term debt issued by corporations to finance their immediate cash needs.

4. Bank deposits: These include savings accounts, checking accounts, and certificates of deposit, which offer low-risk returns and easy access to cash.

Short-term portfolios are different from long-term portfolios, which are designed to meet longer-term investment goals, such as retirement savings or college education. Short-term portfolios are focused on meeting immediate liquidity needs and therefore prioritize the preservation of capital over generating high returns.

In summary, short-term portfolios consist of assets that mature in less than one year and are designed to provide investors with quick access to cash to meet short-term liquidity needs.