A business\'s financial statements show a significant increase in publicly trade

Question

A business's financial statements show a significant increase in publicly traded stocks and bonds as a percentage of total assets. What is the likely impact of this on the business's borrowing needs? Borrowing needs will depend on the type of stocks and bonds held in the portfolio. Borrowing needs will remain the same because businesses are not allowed to borrow to purchase securities. Borrowing needs are likely to decrease because securities can easily be converted to cash Borrowing needs are likely to increase during the period

Explanation / Answer

option (c )

borrowing needs can decrease because the business has marketable securities which are liquid for further investments if required.

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