One Way to Alleviate the Problem of the Low Returns

question 18

Multiple Choice

One way to alleviate the problem of the low returns associated with cash, but still maintain high liquidity is to

• A)keep no cash on hand.
• B)invest in more bonds.
• C)borrow funds at a lower interest rate.
• D)invest in marketable securities.

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Definitions:

Direct Materials

Raw materials directly used in the manufacturing process of a product, easily traceable and integral to the finished good.

Direct Labor

The wages and other costs for labor that is directly involved in the manufacturing or production of goods or services.

Operating Income

A measure of a company's profit excluding one-off items and costs not directly related to its core operations, such as interest and taxes.

Net Cash Inflows

The total amount of cash received minus cash outflows over a specific period, indicative of financial health.