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

  • Cash and short-term investments held in less than one year 

  • Intermediate-term investments held between one to seven years 

  • Long-term investments held over seven years 

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