American_Bankers_Association
CTFA · Question #111
Which would be an appropriate investment for temporarily idle cash that will be used to pay quarterly dividends three months from now?
The correct answer is C. Ninety-day commercial paper with a current annual yield of 6.2 percent. See the full explanation below for the reasoning.
Investment Management
Question
Which would be an appropriate investment for temporarily idle cash that will be used to pay quarterly dividends three months from now?
Options
- AA long-term Aaa-rated corporate bond with a current annual yield of 9.4 percent
- BA 30-year Treasury bond with a current annual yield of 8.7 percent
- CNinety-day commercial paper with a current annual yield of 6.2 percent
- DCommon stock that has been appreciating in price 8 percent annually, on average, and paying a
How the community answered
(41 responses)- A17% (7)
- B7% (3)
- C71% (29)
- D5% (2)
Topics
#short-term investments#liquidity management#commercial paper#cash deployment
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