In Considering Whether a Company Should Invest in Debt or Equity

question 118

Multiple Choice

In considering whether a company should invest in debt or equity securities of another company,which of the following statements is incorrect?

• A) The company wants to make the best use of its excess cash to generate investment income.
• B) Investment income consists of interest earned from equity securities and dividends earned from debt investments.
• C) Investment income includes increases in the market value of debt or equity securities.
• D) The excess cash that can be invested could be the result of temporary or seasonal business fluctuations.

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Definitions:

Manic Episodes

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Lobotomy

A surgical procedure that involves cutting into the prefrontal lobe of the brain, once used to treat mental disorders but now largely discredited.

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A bony region containing the eyeball; also known as the orbit.

Medical Instrument

A tool or device designed for use in the diagnosis, monitoring, treatment, or prevention of medical conditions.