Imagine a Firm Has a Temporary Surplus of Cash Meant

question 67

Multiple Choice

Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the next nine months. Which of the following statements is correct?

• A)The firm will probably want to invest this preferred stock.
• B)The firm will probably want to invest this surplus in U.S. Treasury bonds.
• C)The firm will probably want to invest this surplus in U.S. Treasury bills.
• D)The firm will probably want to invest this surplus in whichever security yields the highest return.

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Definitions:

Transaction Price

The price agreed upon by a buyer and seller for the exchange of goods or services, often noted in a contract.

Promised Goods

Goods that a seller has agreed to deliver to a buyer under a contract or sales agreement.

Consignment

A business arrangement in which goods are entrusted to a third party to sell, with payment occurring only after the sale.

Economic Benefits

The potential profitable returns or advantages that can be obtained from an economic activity or resource.