Which of the Following Statements Concerning Marketable Securities Is Correct

question 48

Multiple Choice

Which of the following statements concerning marketable securities is correct?

• A)Marketable securities are extremely liquid investments.
• B)Marketable securities generally are long-term investments.
• C)Marketable securities provide higher yields than the firm's other investments.
• D)The primary purpose for holding marketable securities is to support long-term operations.
• E)Marketable securities are held by a firm that normally has cash deficiencies.

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Definitions:

Operating Cycle

The period it takes for a business to buy inventory, sell products, and collect cash from sales, reflecting the efficiency of a company’s operations.

Inventory Period

The average number of days that a company holds its inventory before selling it, indicating the efficiency of its inventory management.

Accounts Receivable Period

The average number of days it takes for a business to receive payments from its customers for goods or services sold on credit.

Cash Cycle

The time period between the outlay of cash for materials or inventory purchase and the receiving of cash from customer sales, critical for understanding a company's liquidity and management efficiency.