E12-1

 Max Weinberg is studying for an accounting test and has developed the following questions about investments.

 1. What are three reasons why companies purchase investments in debt or stock securities?

 2. Why would a corporation have excess cash that it does not need for operations?

 3. What is the typical investment when investing cash for short periods of time?

 4. What are the typical investments when investing cash to generate earnings?

 5. Why would a company invest in securities that provide no current cash flows?

 6. What is the typical stock investment when investing cash for stategic reasons?

 Instructions

 Provide answers for Max.