7.5 What is the goal of cash management?

7.7 Give 2 reasons that businesses hold marketable securities (short term investments)

b. Which types of securities are most suitable to hold as marketable securities?

c. Suppose Southwest Regional Medical Center has just raised $ 6 million in new capital that it plans to use to build 3 freestanding clinics, one each year over the next 3 years. (For the sake of simplicity, assume that equal payments have to be made at the end of each of the next 3 years). What securities should be bought for the firms marketable securities portfolio, assuming that the firm has no excess cash? (Hint: consider both the type and maturity of the securities).

d. Now consider the situation faced by Huntsville Physical therapy group. It has accumulated $ 20,000 in cash above its target cash balance, and it has no immediate needs for this excess cash. However, the firm may at any time need some or all of the $20,000 to meet unforeseen cash needs. What securities should be bought for the firms marketable securities portfolio?