In Considering Whether a Company Should Invest in Debt or Equity

question 64

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 debit or equity securities.
• D)The excess cash that can be invested could be the result of temporary or seasonal business fluctuations.