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Investment in Marketable Securities

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A firm expects to have funds of $150,000 idle for 60 days. If the firm could purchase marketable securities yielding 10 percent and pay brokerage fees of $1,500, the firm _________.

(a) should make the investment since interest earned exceeds brokerage fees

(b) should not make the investment since brokerage fees exceed interest earned

(c) should leave the $150,000 in cash

(d) should invest the funds for more than 60 days due to the favorable rate

Please advise answer & why. Thanks so very much!!

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Solution Summary

The solution explains whether to invest idle funds in marketable securities

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It should leave the $150,000 in cash.

If it invests it does get $2500 which is more than the ...

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