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.

Identify factors leading to strategy changes in organizations.

Grasp the concept of response strategies to the global environment.

Know important international agreements and organizations affecting global operations.

Understand the basic characteristics and rights associated with common and preferred stocks.

---

Definitions:

Principal-Agent Relationship

A legal relationship where one party (the agent) acts on behalf of another party (the principal) in business transactions.

Power to Bind

The authority granted to an agent or representative to enter into contracts or agreements that legally bind the principal to the terms.

Contract

An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable by law.

Right to Control

The authority or power to regulate, direct, or command something or someone's actions or decisions.