Q. Which would be an appropriate investment for temporarily idle corporate cash that will be used to pay quarterly dividends three months from now?
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(A)
A long-term AAA-rated corporate bond with a current annual yield of 9.4 percent.
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(B)
A 30-year Treasury bond with a current annual yield of 8.7 percent.
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(C)
Ninety-day commercial paper with a current annual yield of 6.2 percent.
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(D)
Common stock that has been appreciating in price 8 percent annually, on average, and paying a quarterly dividend that is the equivalent of a 5 percent annual yield.
✅ Correct Answer: (C)
Ninety-day commercial paper with a current annual yield of 6.2 percent.