Asked by Andrea Madison on Jun 19, 2024
Verified
Corporations invest excess cash for short periods of time in each of the following except
A) equity securities.
B) highly liquid securities.
C) low-risk securities.
D) government securities.
Equity Securities
Equity securities represent ownership interest held in a company by investors in the form of shares of stock, which may generate income through dividends and potential appreciation.
Highly Liquid Securities
Financial instruments that can easily be converted into cash with minimal impact on their price.
Low-Risk Securities
Investments that have a lower chance of loss or default, often characterized by more stable returns.
- Categorize the motivations behind corporate investments in debt or equity securities.
Verified Answer
KL
Kayla LibertiJun 21, 2024
Final Answer :
A
Explanation :
Corporations typically do not invest excess cash in equity securities as they carry a higher level of risk and are less liquid than other investment options. Instead, they tend to invest in highly liquid, low-risk securities such as government securities or other short-term debts.
Learning Objectives
- Categorize the motivations behind corporate investments in debt or equity securities.