Which of the Following Is Not a Reason for Firms

question 39

Multiple Choice

Which of the following is not a reason for firms to own marketable securities?

• A)Marketable securities serve as a substitute for cash balances.
• B)Marketable securities offer a place to temporarily put cash balance to work earning a positive return.
• C)Marketable securities are used as a temporary investment to finance seasonal or cyclical operations.
• D)Marketable securities are used as a temporary investment to amass funds to meet financial requirements in the near future.
• E)Marketable securities are more liquid than cash balances.

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Definitions:

Replacement Stream

A sequence of cash flows expected to be received or paid over time in order to replace an asset or meet an obligation.

Economically Equivalent

Economically equivalent means having the same or similar economic effect or value when comparing two or more financial situations or variables.

Economic Value

Refers to the worth of a good or service, as determined by the market or its utility to an individual or business.

Missing Value

An absent data point or piece of information that was not recorded or is unknown in a dataset or equation.