Problem:
Max Weinberg is studying for an accounting test and has developed the following questions about investments.
Required:
Question 1: What are three reasons why companies purchase investments in debt or stock securities?
Question 2: Why would a corporation have excess cash that it does not need for operations?
Question 3: What is the typical investment when investing cash for short periods of time?
Question 4: What are the typical investments when investing cash to generate earnings?
Question 5: Why would a company invest in securities that provide no current cash flows?
Question 6: What is the typical stock investment when investing cash for strategic reasons?
Note: Explain in detail.