rock roll corp. is a small public company with a December 31 fiscal year-end. At...
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rock roll corp. is a small public company with a December 31 fiscal year-end. At the end of
2016,
the company had
$36
million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the financing later. The board directed management to invest the funds in a diversified portfolio of debt instruments. As a result, on January 1,
2017,
management purchased
$12
million of short-term government bonds,
$12
million of medium-term government bonds, and
$12
million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments.
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