Question 1: What options are available to a firm if it believes it has too much cash? How about too little?
Question 2: For each of the short-term marketable securities given here, provide an example of the potential disadvantages the investment has for meeting a corporation's cash management goals.
a. U.S. Treasury bills
b. Ordinary preferred stock
c. Negotiable certificates of deposit (NCDs)
d. Commercial paper
Question 3: Another option usually available for dealing with excess cash is to reduce the firm's outstanding debt. What are the advantages and disadvantages of this use of excess cash?