Which of the following is not a situation that might lead a firm to hold marketable securities?
A) The firm has purchased a fixed asset that will require a large write-off of depreciable expense.
B) The firm must meet a known financial commitment, such as financing an ongoing construction project.
C) The firm must finance seasonal operations.
D) The firm has just sold long-term securities and has not yet invested the proceeds in earning assets.
E) None of the statements above is correct. (All of the situations might lead the firm to hold marketable securities.)

Question

Quizplus · Accepted Answer

Holding marketable securities would not be a solution for a firm facing a large write-off of depreciable expense from a fixed asset purchase. Marketable securities are typically held for short-term liquidity management or investment purposes, not to offset long-term asset write-offs.

Which of the Following Is Not a Situation That Might