If a Firm Maintains a Relatively High Level of Investments

question 413

Multiple Choice

If a firm maintains a relatively high level of investments in cash and marketable securities, which of the following statements is true?

• A) The firm is probably following a restrictive short-term financial policy.
• B) The firm adds little to shareholder wealth by making these types of investments.
• C) The chances of the firm facing financial distress are increased by this policy.
• D) The firm likely faces a relatively high level of shortage costs.
• E) The firm faces a relatively low level of opportunity costs.

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