One method healthcare companies use to finance future growth is to invest their excess cash in short-term investments. The four most common short-term investments are treasury bills, CDs, commercial paper, and money markets.
- In your own words, explain how each of the four investments work and their relative risk level.
- If your company had $100,000 to invest for around 1-year, which one of the 4 types of short-term investment would you suggest using and why?
- Look at CD rates over different time periods. What are the current CD rates for 1-year? 5-years? 10-years? (You can find CD rates on many bank’s websites.) Why do you think the rates are different?