Introduction

Cash and Cash Equivalents are the safest, most liquid investments on the spectrum, and the exam expects you to know exactly how they differ from one another.

Exam Weight: Part of ~17 questions

What You'll Learn

In this unit, you'll cover:

• Insured Deposits: Demand deposits and certificates of deposit (CDs) - how FDIC insurance works, what it covers, and the critical difference between negotiable and non-negotiable CDs
• Money Market Instruments: Commercial paper, Treasury bills, banker's acceptances, repos, federal funds, and money market funds; their maturities, risks, and the key distinction between money market funds and money market deposit accounts

Why This Matters

Cash equivalents are the starting point of the investment risk spectrum. Every client portfolio includes some allocation to these instruments, whether for liquidity, capital preservation, or as a temporary parking place between investments. Understanding the differences between insured and uninsured instruments, government and corporate obligations, and deposits versus securities matters for making suitable recommendations.

The Series 66 assumes you know what these instruments are from the Series 7. Here, the focus is on characteristics and distinctions - especially the insurance and risk differences the exam loves to test.

Let's start with insured deposits: the safest instruments on the spectrum.