Short-term borrowing and investing represent critical parts of the treasury function related to daily liquidity management. The first sections of this chapter discussed the various issues related to management of the short-term investment portfolio, including internal versus external management, investment strategies, reporting, and securities safekeeping. These sections also introduced key risks associated with short-term investments and presented pricing and yield calculations.

In the last half of the chapter, various forms of short-term borrowing were discussed, including effective borrowing cost calculations for lines of credit and commercial paper. The chapter concluded by describing the operational trade-offs of using short-term debt relative to long-term debt, as well as the role and importance of market information, including credit ratings.