short term investment

Natazia Amelia Agies
26209849/Tugas softskill bahasa inggris ke-4
Definition of 'Short Term'
1. In general, holding an asset for short period of time.
2. In accounting, an asset expected to be converted into cash in the next year, or a liability coming due in the next year. Also known as current assets and liabilities.
3. For investing, a security that matures in one year or less.
4. For taxes, a holding period of less that one year.
Definition of 'Investment'
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Definition of 'Short-Term Investment Fund
A type of fund that invests in short-term investments of high quality and low risk. The goal of this type of fund is to protect capital with low-risk investments while achieving a return that beats a relevant benchmark such as a Treasury bill index. They are commonly used by investors to temporarily store funds while arranging for their transfer to another investment vehicle that will provide higher returns. This type of fund aims to protect capital while generating a return that compares favourably with a particular benchmark, such as a Treasury Bill index. These types of fund have low management fees (usually well beneath 1% p.a.) and relatively low rates of return, commensurate with their low-risk investment style.

Short-term investment funds include cash, bank notes, corporate notes, government bills and various safe short-term debt instruments. These types of funds are usually used by investors who are temporarily parking funds before moving them to another investment that will provide higher returns. These funds traditionally have low management fees, usually well below 1% per year.

Short-term investments are readily marketable securities (stocks and bonds) that are intended to be sold within the time period of current assets. Logically, short-term investments are classified as current assets.
Security investments have to meet the following two (2) criteria to be classified as short-term investments:
• The investment is readily marketable
• Management intends to convert the investment into cash within one (1) year or operating cycle, whichever is longer
Security investments that do not meet both criteria should be classified as long-term. For example, stocks of privately held corporations are likely to have very limited markets, and as the result, such equity investments would not meet the first criterion and should be classified as long-term. Management might not have intent to sell the investment in the near term, and as the result, such an investment should be classified as long-term.
What does readily marketable mean? Readily marketable securities can be converted into cash (i.e., sold) on demand. For instance, stocks and bonds sold on public stock exchanges usually meet this criterion. Readily marketable securities can be classified as trading or available-for-sale (i.e., see next section).
The second criterion is more difficult to evaluate. Management might have an incentive, not intent, to include its investments in the short-term section of the balance sheet to improve the company’s liquidity and working capital ratios.

Source:
http://simplestudies.com/accounting-for-short-term-investments.html/page/2
http://www.wikinvest.com/metric/Short_Term_Investments
http://www.answers.com/topic/short-term-investment-1
http://en.wikipedia.org/wiki/Short-term_investment_fund
http://beginnersinvest.about.com/od/analyzingabalancesheet/a/long-term-investments.htm