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 in 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.

Question

Quizplus · Accepted Answer

U.S. Treasury bills are short-term securities, making them an ideal investment for a firm looking to park surplus cash temporarily without significant risk. They offer a safe, liquid option for the firm's needs, aligning with the short-term horizon until the funds are needed for the expansion project.

Imagine a Firm Has a Temporary Surplus of Cash Meant