Firms That Continually Invest in Nontrivial Amounts of Marketable Securities

question 14

Multiple Choice

Firms that continually invest in nontrivial amounts of marketable securities may be guilty of:

• A) excessive short-term borrowing.
• B) not matching their sources and uses of cash.
• C) incurring excessive shortage costs.
• D)not maximizing shareholder returns.

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Definitions:

Total Cost

The sum of all costs involved in producing a given level of output, including both fixed and variable costs.

Minimum Point

The lowest point on a curve, often referring to the lowest point of costs or output in economic models.

Average Variable Cost

The cost per unit of output, excluding fixed costs, calculated by dividing total variable costs by the number of units produced.

Marginal Cost

The expenditure involved in creating one more unit of a product or service.