Which of the Following Statements About Investment of Idle Cash

question 19

Multiple Choice

Which of the following statements about investment of idle cash balances in longer-term (but not long-term) fixed-period investments is false?

• A)Companies can usually obtain a higher interest rate on longer term investments.
• B)Higher transaction costs of continual reinvestment in short-term securities can usually be avoided.
• C)A problem with such a cash management policy is the possibility of an unforeseen cash shortage.
• D)Longer term fixed-interest securities are not considered as alternative investments to holding cash.

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