Question

Read Chapter 19 and Bonus Chapter D (Managing Personal Finances). The fundamental purpose of a business...

Read Chapter 19 and Bonus Chapter D (Managing Personal Finances).

The fundamental purpose of a business is to generate profit for its ownership by providing a good or service. Often, businesses retain earnings or pay owners distributions, but several common problems arise in either retaining too much cash or paying owners significant sums:

A) What low risk alternatives to cash are available to businesses?

b) As business owners' net worth is often heavily tied into their businesses, what alternative places can distributions or retained earnings be placed to diversify their assets?

Explain your reasoning.

Homework Answers

Answer #1

ANS a) Though Cash is Readily available and acceptable,it amounts to pliferage and Mis-handling. So, Various Business can opt or go for the low risk alternatives, they are:-

  1. Bank Saving
  2. Deposit Certificate
  3. Money market fund
  4. Bonds/Debentures
  5. Treasury Bills etc.

ANS b) Major activities are involved in efficient portfolio management or diversification of assets

  • Identification of Assets and Securities,Allocation of Investment
  • Deciding about major weights or porportion of different assets
  • Securities selection within the assets

The alternatives places where distributions or retained earning be placed to diversify asset or portfolio are:

  1. Mutual fund
  2. Real estate
  3. Infrastructure debt fund
  4. Hedge funds etc
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT