Which situation is NOT likely to lead a firm to hold marketable securities?
A)The firm has replaced an obsolete machine with a new model; a large write-off must be taken on the old machine.
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.

Question

Quizplus · Accepted Answer

Holding marketable securities is not likely to be a solution to replacing an obsolete machine and taking a large write-off. The other options presented may require a firm to hold marketable securities in order to meet financial obligations or bridge gaps between long-term investments.

Which Situation Is NOT Likely to Lead a Firm to Hold