Firms Buy Commercial Paper as Part of Their Portfolio of Cash

question 69

Multiple Choice

Firms buy commercial paper as part of their portfolio of cash equivalents because:

• A) it is issued by the U.S. government.
• B) it is a safe way to earn some interest.
• C) it establishes credit standards.
• D) it specifies the benefits of long-term investment proposals.

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Definitions:

Tax

Mandatory financial contributions imposed by a government on individuals, corporations, or goods to fund public expenditures.

Tax Burden

The measure of the total amount of taxes imposed by government on individuals, corporations, goods, and services, affecting the income and purchasing power of taxpayers.

Buyer

An individual or entity that purchases goods or services for personal use or for the purpose of resale.

Tax Revenue

Income that is gained by governments through taxation, which is then used to fund public services and government commitments.