Firms may make long-term investments in the equity instruments of other entities because:

Question

Quizplus · Accepted Answer

All of the given answers are correct. A firm may make long-term investments in the equity instruments of other entities because it can ultimately form the basis for a takeover bid, holding a diversified portfolio of shares can reduce the level of risk of the entity, and the investment is expected to yield a return in the form of capital gains and dividends.

Firms May Make Long-Term Investments in the Equity Instruments of Other