Questions on cash and cash equivalents

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Reference no: EM1314049

Multiple choice questions on cash and cash equivalents.

A company that increases its liquidity by holding more cash and marketable securities is:
a. likely to achieve a higher return on equity because of higher interest income.
b. going to maximize firm value because risk is decreased.
c. likely to achieve a lower return on equity because of the smaller rates of return earned on cash and marketable securities compared to the firm's other investments.
d. going to have to sell common stock to raise the cash to become more liquid.

Reference no: EM1314049

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