Which of the following is NOT a situation that might lead a firm to hold marketable securities?
A) The firm has replaced an obsolete machine with a new model; a large write-off must be taken on the old machine.
B) The firm must meet a known financial commitment, such as financing an ongoing construction project.
C) The firm must finance seasonal operations.
D) The firm has just sold long-term securities and has not yet invested the proceeds in earning assets.

Question

Quizplus · Accepted Answer

Holding marketable securities is not a solution to a situation where a firm has replaced an obsolete machine with a new model and must take a large write-off on the old machine. The other choices provide valid reasons for a firm to hold marketable securities.

Which of the Following Is NOT a Situation That Might