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Businesses Invest in the Marketable Securities of Other Entities for the Short-Term

Question 33

Multiple Choice

Businesses invest in the marketable securities of other entities for the short-term because:

A) Using cash to purchase marketable securities improves the current ratio, loosening debt covenant restrictions.
B) It is an effective way to manage cash surpluses so that the investment may be turned into cash at short notice.
C) A diversified portfolio of marketable securities is less risky than having cash on deposit.
D) Using cash to purchase marketable securities improves the current ratio, loosening debt covenant restrictions and it is an effective way to manage cash surpluses so that the investment may be turned into cash at short notice.

Correct Answer: