Which one of the following statements is correct?Multiple ChoiceShort-term investments tend to have highlevels of default risk.The rate of return earned on short-termsecurities tends to exceed that earned onlong-term securities.Treasury bills are well suited for short-terminvestments.Short-term securities are more interest ratesensitive than long-term securities.The income earned on Treasury bills isexempt from all taxation. Regarding a motive for maintaining liquidity, which of the following istrue?Multiple ChoiceFirms need to hold cash as a bufferbetween inflowing and outflowingtransactions.Firms should maintain compensatingbalances just in case they encounter anemergency situation.The increasing use of electronic fundstransfers is increasing the transactionalmotive to hold cash.International firms have a transactionalmotive to hold cash in case favorableexchange rates become available.Firms need to hold cash for precautionarymotives especially since money marketaccounts are not very liquid.

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Which one of the following statements is correct? Multiple Choice Short-term investments tend to have high levels of default risk. The rate of return earned on short-term securities tends to exceed that earned on long-term securities. Treasury bills are well suited for short-term investments. Short-term securities are more interest rate sensitive than long-term securities. The income earned on Treasury bills is exempt from all taxation.

Which one of the following statements is correct? Multiple Choice Short-term investments tend to have high levels of default risk. The rate of return earned on short-term securities tends to exceed that earned on long-term securities. Treasury bills are well suited for short-term investments. Short-term securities are more interest rate sensitive than long-term securities. The income earned on Treasury bills is exempt from all taxation.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 6QE

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