Look at the table below showing an example of a checkbook ledger. Show Adrienne has several receipts from recent transactions that she entered in her records. The receipts include an ATM receipt for a $60.00 withdrawal (plus a $2.00 transaction fee), a grocery store receipt for $32.50, and a $1,200 paycheck deposit slip. When she finishes entering her transactions, Adrienne realizes that her balance is incorrect. Assuming that Adrienne's beginning account balance was $320.00, why is her balance incorrect? Adrienne forgot to include the $2.00 ATM transaction fee. Look at the table below showing an example of a checkbook ledger. Adrienne has several receipts from recent transactions that she entered in her records. The receipts include an ATM receipt for a $60.00 withdrawal (plus a $2.00 transaction fee), a grocery store receipt for $32.50, and a $1,200 paycheck deposit slip. Recommended textbook solutions Financial Accounting9th EditionCharles T. Horngren 1,286 solutions Horngren's Cost Accounting: A Managerial Emphasis16th EditionMadhav V Rajan, Srikant M. Datar 1,008 solutions Financial Accounting9th EditionCharles T. Horngren 1,286 solutions Fundamental Financial Accounting Concepts9th EditionChristopher Edmonds, Frances M McNair, Philip R. Olds, Thomas P. Edmonds 1,632 solutions Recommended textbook solutions
Glencoe Accounting: First Year Course1st EditionGlencoe McGraw-Hill 548 solutions Financial Accounting9th EditionCharles T. Horngren 1,286 solutions Fundamental Financial Accounting Concepts9th EditionChristopher Edmonds, Frances M McNair, Philip R. Olds, Thomas P. Edmonds 1,632 solutions
Corporate Finance11th EditionBradford D. Jordan, Randolph W. Westerfield, Stephen A. Ross 1,433 solutions The image shows Gale's investments during one year. What does the information demonstrate about Gale's investments? If she had purchased only the stock and had not diversified her investments, she would have lost money. 1. Issuers include governments, securities dealers, commercial banks, and other corporations (including not-for-profits). >State and local government agencies raise funds in the money market by issuing short-term promissory notes, referred to here as government paper. >The market for most country's government paper is liquid and highly active, due to the government's backing. The yields on government paper tend to be lower than other instruments of comparable maturity because of the lower default risk. >In most cases government paper is issued on a discount basis. A variety of maturities are generally available, depending on the government's borrowing requirements, allowing investors to closely match their liquidity requirements. >UK gilts, US Treasuries, German bonds, Japanese government bonds (JGBs), and Mexican government bonds are all examples of sovereign government bonds. The United States, Japan, and Europe have historically been the biggest issuers in the government bond market. >While US Treasury issues include T-bills, notes, and bonds, only those maturing within one year are classified as money market instruments. Due to a perception of low liquidity and low default risk, US treasuries are generally considered risk-free and serve as the benchmark against which interest rates on other debt securities are compared. >T-bills are money market instruments that are sold at a discount to their par value at maturity and are issued with original maturities of less than one year. At the time of this writing, bills are issued with maturities of 4, 13, 26, and 52 weeks. >Newly issued T-bills are sold through a multiple-price, sealed-bid auction. T-bills can be purchased on either a competitive or a noncompetitive basis. For investors submitting competitive bids, the bids are accepted starting with the highest price (e.g., lowest yield) offered, down to the lowest price necessary to sell the entire issue. Noncompetitive bids may also be submitted. In this case, the bidder is guaranteed to receive the desired amount of T-bills at the average price from the competitive bid process. >Firms, banks, sovereigns, and government agencies raise short-term funds via FRNs. In terms of maturity, FRNs sit at the longer end of the money market maturity spectrum, with maturities typically of one year or longer. FRNs pay a regular coupon, as well as the promise of a return of their face value at maturity. The actual return, or margin, on a FRN is a combination of the coupon interest rate and the capital gain or loss that results from a FRN transaction, since FRNs are traded on the secondary market at a discount. If a FRN is trading at par value, then the return is identical to the coupon rate. >The name floating-rate note derives from the fact that the rate of interest resets periodically, based on a reference rate such as the London Interbank Offered Rate (LIBOR) or the Euro Interbank Offered Rate (Euribor). As a result, FRNs are sold at a quoted spread over the stated reference rate. The spread is a rate that remains constant while the reference rate can vary. FRNs can have a variety of special features, such as minimum or maximum coupon rates. Perpetual FRNs are a type of FRN that is issued with no maturity date, and investors can only recapture their capital by selling them on the secondary market. >Money market funds generally have a net asset value (NAV) set at one until of the currency of offering, such as dollars, pounds, or euros. The primary goal of MMFs is stability and security. As long as the NAV of a fund does not fall below one unit (e.g., - $1), referred to as "breaking the buck," the investor's initial principle is secure. Historically, MMFs have been secure investments, and many treasury professionals regard them as the equivalent of cash in the bank. >It should be emphasized that MMFs are not riskless assets and funds can differ substantially in terms of risk, maturity, and return. In September 2008, the Reserve Primary Fund became the second US MMF to "break the buck." The fund held a considerable amount of commercial paper issued by Lehman Brothers, which was considered worthless after the investment bank failed. This event created a run on the Reserve Primary Fund, which then spread to other MMFs. The funds begin to sell securities and hoard cash in order to meet redemption demands. Since MMFs held approximately 40% of outstanding commercial paper at that time, corporations had difficulty finding buyers for new short-term debt. The SEC implemented several rule changes to prevent future runs on MMFs. Initial reforms adopted in 2010 reduced risk by mandating liquidity requirements to allow funds to more easily meet demand for redemptions. >Additional reforms are scheduled for implementation in October 2016. These measures apply to institutional money market funds that do not qualify as government funds. The new rules include a floating NAV, redemption fees if a fund's weekly liquid assets fall below a threshold, and the ability to suspend redemptions (redemption gates) for a period of up to 10 business days. Government MMFs which hold 99.5% or more of their assets in cash, government securities, or repurchase agreements collateralized by government securities are not subject to these rules. Operated by the US Treasury, the CBES is a multitiered, automated system for purchasing, holding, and transferring marketable treasury securities. CBES exists as a delivery system that provides for the simultaneous transfer of securities against the settlement of funds. Securities owners (or their brokers on their behalf) receive interest and redemption payments wired directly to their linked accounts. At the top tier of the CBES is the National Book-Entry System (NBES), which is operated by the Fed. For Treasury securities, the Fed operates the NBES in its capacity as the fiscal agent of the US Treasury. The Federal Reserve Banks maintain book-entry accounts for depository institutions, the US Treasury, foreign central banks, and most government-sponsored enterprises (GSEs). At the middle tier of the CBES, depository institutions hold book-entry accounts for their customers (e.g., brokers, dealers, institutional investors, and trusts). At the lower tier, each broker, dealer, and financial institution maintains book-entry accounts for individual customers, corporations, and other entities. When an investor purchases securities through a broker, dealer, or financial institution, the securities are held on the book-entry system of that firm. Holding Treasury securities in this manner is known as indirect holding since there are one or more entities between the investor and the issuer (US Treasury). The CBES has succeeded in replacing paper securities with electronic records, eliminating the potential for theft, loss, or counterfeiting. ++In-house management (or internally managed) is generally appropriate only to the extent that the individuals charged with this responsibility have the training and experience required to effectively manage the portfolio. ++The primary advantage of in-house management is that the firm maintains control over the investment process. ++However, a key disadvantage of in-house management is that it is costly to hire, train, and retain employees with the skills needed to execute the short-term investment strategy. Some firms deal with this issue by investing only in money market funds (MMFs). ++This practice may help alleviate some of the need for market knowledge and research, but does not relieve the firm of its overall responsibility to effectively manage its portfolio. ++With outsourced management (or external management) the short-term investment portfolio duties are assigned to a third party provider, such as a MMF manager or an outside money manager (e.g., an investment bank or registered investment advisor). ++While management costs or fees will be incurred (e.g., 10-100 basis points), these fees should be balanced against the cost needed to hire and maintain appropriate internal expertise. The use of external managers may also be dictated by the size and complexity of the organization's portfolio. ++External fund and money managers will typically have greater resources and experience than those usually found within an organization's treasury department. ++One of the most important of these resources is ready access to securities research. While in-house treasury managers can usually get access to research information from their broker-dealers, they must ask for it and in some cases may be required to pay for it. ++A potential disadvantage of outsourcing is that investment policies and guidelines must be communicated clearly to the outside manager, who must be able to make individual, tactical investment decisions within a portfolio independent of the investor client and within the policy guidelines (or exception provisions). ++This may become an issue when using MMFs, as the manager's investment choices may not be aligned with the client's preferences completely. Other issues can include compliance monitoring and general due diligence with regard to the safety and soundness of the outside manager. --Formulating a short-term investment policy requires (1) recognition of the primary short-term investment objective of preservation of principal and (2) that the firm's board and management determine the firm's overall risk tolerance. Additionally, a board-approved investment policy should include the following: ++Investment objectives with respect to risk and return ++Permissible and prohibited investment vehicles or classes of investments ++Minimum and acceptable security ratings ++Maximum maturity for individual securities ++Maximum weighted average maturity or duration for the portfolio ++Maximum amounts or concentration limits (either by percentage, total dollar amount, or both) of the portfolio that may be invested in individual securities, companies, instrument classes, geographic areas, or industries ++Policies/guidelines for investing in foreign securities ++Specific responsibilities for implementing the policy, by organizational title ++Methods of monitoring compliance with policies, procedures, and internal controls ++Provisions for performance measurement, evaluation, and reporting ++Responsibilities and reporting requirements for custodians, external investment managers, broker-dealers, and other investment counterparties ++Exception management and related approval processes What is an example of a short term investment?Some common examples of short-term investments include CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills. Usually, these investments are high-quality and highly liquid assets or investment vehicles.
What are short term investments quizlet?Short-term Investments: Are also called marketable securities. Investments in marketable securities easily convertible to cash that a company plans to hold for 1 yr or less. They allow the company to invest cash for a short period of time and earn a return until cash is needed.
Which asset is considered a longMost long-term investments are marketable securities, either stocks or bonds.
What are some characteristics of short term investments?Some of the desired traits in short-term investments are safety, liquidity, and returns, and money market accounts have these characteristics. Money market accounts are ideal places for corporations and investors to park their cash for a short time while they wait for an opportunity to deploy it.
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Which is an example of a short term investment quizlet?
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