Firms That Continually Invest in Non-Trivial Amounts of Marketable Securities

question 134

Multiple Choice

Firms that continually invest in non-trivial 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:

Utility Function

A mathematical representation in economics that explains how individuals rank preferences or choices to maximize satisfaction.

Indifference Curves

Indifference curves represent combinations of goods between which a consumer is indifferent, showing the trade-offs in consumption that yield equal satisfaction.

Horizontal Axis

In a graph or chart, the x-axis, which typically represents the independent variable or the base for measurement comparisons.

Vertical Axis

The y-axis on a graph or chart which is usually used to measure and represent the dependent variable.