Which of the Following Is Not a Situation That Might

question 42

Multiple Choice

Which of the following is not a situation that might lead a firm to hold marketable securities?

• A) The firm has purchased a fixed asset that will require a large write-off of depreciable expense.
• B) The firm must meet a known financial commitment, such as financing an ongoing construction project.
• C) The firm must finance seasonal operations.
• D) The firm has just sold long-term securities and has not yet invested the proceeds in earning assets.
• E) None of the statements above is correct. (All of the situations might lead the firm to hold marketable securities.)

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Definitions:

GDP

The sum total of all goods and services created over a given period in a country, termed Gross Domestic Product, measures its economic achievements.

GDP

Gross Domestic Product is a calculation that reflects the economic success of a nation by summing the value of all produced goods and services within a certain time frame.

Consumption

The use of goods and services by households, contributing to the overall demand in an economy.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, often through the acquisition of assets.