Investing in marketable securities marketable

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Unformatted text preview: ethical. A ZBA enables the firm to maximize the use of float on each check without altering the float time of payments to its suppliers. Keeping all the firm’s cash in an interestearning account enables the firm to maximize earnings on its cash balances by capturing the full float time on each check it writes. Investing in Marketable Securities Marketable securities are short-term, interest-earning, money market instruments that can easily be converted into cash.6 Marketable securities are classified as part of the firm’s liquid assets. The firm uses them to earn a return on temporarily idle funds. To be truly marketable, a security must have (1) a ready market in order to minimize the amount of time required to convert it into cash, and (2) safety of principal, which means that it experiences little or no loss in value over time. The securities that are most commonly held as part of the firm’s marketablesecurities portfolio are divided into two groups: (1) government issues, which have relatively low...
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This document was uploaded on 01/19/2014.

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