Asked by Ashley Eggleston on May 21, 2024

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Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities?

A) The company may have excess cash.
B) The company may generate a significant portion of its earnings from investment income.
C) The company may invest for the strategic reason of establishing a presence in a related industry.
D) The company may invest for speculative reasons to increase the value in pension funds.

Seasonal Fluctuations

Variations in business activity, sales, or performance that occur regularly at certain times of the year due to the season.

Debt Securities

Financial tools that signify an investor lending money to a borrower, commonly consisting of bonds, notes, and bills.

Speculative Reasons

Motivations based on speculation where actions are taken with the expectation of future financial gains or losses.

  • Understand the rationale behind companies' investment decisions, including for excess cash management or strategic reasons.
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EO
Eniola OlowookereMay 28, 2024
Final Answer :
A
Explanation :
Companies with seasonal fluctuations in sales may have excess cash during certain times of the year and may choose to invest in securities to earn a return on their extra funds.