Which of the Following Is NOT a Situation That Might

question 65

Multiple Choice

Which of the following is NOT a situation that might lead a firm to increase its holdings of short-term marketable securities?

• A) The firm must make a known future payment,such as paying for a new plant that is under construction.
• B) The firm is going from its peak sales season to its slack season,so its receivables and inventories will experience a seasonal decline.
• C) The firm is going from its slack season to its peak sales season,so its receivables and inventories will experience seasonal increases.
• D) The firm has just sold long-term securities and has not yet invested the proceeds in operating assets.
• E) The firm just won a product liability suit one of its customers had brought against it.

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Definitions:

Plumbing Market

A segment of the market that deals with the distribution and installation of water supply and sanitary systems in buildings.

Long-Run Equilibrium

A state in which all firms in an industry are producing at their minimum long-run average cost, and the market supply equals market demand.

Profit-Maximizing Quantity

The level of production at which a company can achieve the highest possible profit.

Panel

A group of people selected to discuss, investigate, or decide on matters pertaining to a particular subject or to give expert advice.