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Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the next 9 months
Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the next 9 months. Which of the following statements is correct?
Expert Solution
The company has to finance its projects by internal accrual in 9 months and has surplus cash available
The following conditions the company will analyze before investing its surplus cash for nine months
- The liquidity of the asset class near to cash or cash equivalents
- The least risky or risk-free assets
In the current scenario, the treasury bills have a shorter maturity period and treated as risk-free or least risky assets class to invest
The firm will probably want to invest this surplus in U.S. Treasury bills
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