Primary Functions of Treasury Management
Treasury management comprises three primary functions (1) cash management, (2) limited term investment management, and (3) debt management.
Key Terms
Asset allocation
A method for organizing the investments in your portfolio between stocks, bonds, and cash by percentages.
Diversification
The practice of allocating money between different investments within each asset allocation category.
Volatility
The degree of rapid and unpredictable change.
Equities
Common stock traded in the securities market.
Passive Stock Investments
A marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund.
Active Stock Investments
Requires use of an investment broker to make stock selections and manage investments.
Asset Allocation Timeframes
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Cash and short-term investments held in less than one year
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Intermediate-term investments held between one to seven years
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Long-term investments held over seven years