When a Company Has Excess Cash Not Needed for Operations

question 9

True/False

When a company has excess cash not needed for operations in the short-term,they may make strategic investments to earn investment income which is greater than that earned in a regular bank account.

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Definitions:

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Overproduction

A situation where more goods are produced than can be sold, often leading to excess inventory and potential economic inefficiencies.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive.

Market Price

The market price is the current price at which an asset or service can be bought or sold in a given market.