Question: A business reports investments on its balance sheet. The amount of long-term investments in corporate bonds has remained stable in dollars and has decreased from 4.5 percent of total assets to 4.0 percent during the past three years. Are these investments a likely borrowing cause for last year?
A) Yes, investments are volatile and are often sold at a loss, causing a need to borrow.
B) Yes, investments obligate the business to provide additional financial support, representing a borrowing cause.
C) No, the business plans to hold the investments to maturity so they will not represent a borrowing cause until they are sold.
D) No, the amount of investments has not changed significantly, so they dont represent the borrowing cause