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Question: 1 / 430

What type of asset is Eurodollars classified as?

Equity assets

Debt instruments

Foreign exchange assets

Cash equivalents

Eurodollars are classified as cash equivalents because they refer to U.S. dollars that are deposited in banks outside the United States. These deposits are highly liquid, easily convertible to cash, and typically pose minimal risk of loss of value. As cash equivalents, Eurodollars can be quickly and easily accessed or converted into cash, reflecting their nature as short-term financial instruments that are readily available for use.

The other classifications do not accurately describe Eurodollars. They are not equity assets, as they do not represent ownership in a company; neither are they debt instruments or foreign exchange assets, as they do not entail loans or currency values differing from their nominal value. Therefore, cash equivalents is the most appropriate classification for Eurodollars, aligning with their characteristics of providing high liquidity and stability in value.

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