Which Firms Can Maintain a Higher Portion of Their Liquidity

question 46

Multiple Choice

Which firms can maintain a higher portion of their liquidity in marketable securities and less in cash?

• A)Firms that have well-developed cash management systems and more predictable cash flows.
• B)Firms that have more cash than they need.
• C)Firms that have expertise in securities trading.
• D)Firms that have volatile cash flows.

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Definitions:

Tax Savings

Reductions in income tax obligations as a result of deductions, credits, or other allowances.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to vote at shareholder meetings and receive dividends.

Annuity

A monetary product offering a stable payout to an individual, predominantly aimed at supplying income to retirees.

Periodic Payments

Payments made regularly over a specified period, such as monthly rent or loan repayments.