Question

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a(n) ________.

Answer 1

Answer:

Short term portfolio investment

Explanation:

A portfolio investment is a passive investment in bonds , stocks and other financial security by an individual, company or corporate organization with the expectation of return on investment i.e the financial security will grow in value over time. it is called a passive investment because it does not entail the active participation of the investor in the management of the investment.

Dell investing in a London bank instead of a New York in the hope of getting a higher value for its money is an example of a Short term portfolio investment because this investment is informed by the current interest rate value which could change any time. therefore Dell will hold that inc=vestment for a short term and not a long term.

Answer 2

Answer:

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a short-term portfolio investment.