A fiRm's Marketable Securities Account Has Both 270-Day Corporate Commercial

question 80

True/False

A firm's marketable securities account has both 270-day corporate commercial paper and three-
month Treasury bills. If the firm chooses to shift its policy and invest 100% in commercial paper, it
would likely increase the interest rate risk of its marketable securities portfolio.

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Definitions:

Price Floor

A government-imposed minimum price below which a certain good cannot be sold.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity, often aimed at protecting consumers.

Shortage

A situation where the demand for a product or service exceeds the supply available at a given price.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand.