Which of the Following Is True Regarding Float

question 368

Multiple Choice

Which of the following is true regarding float?

• A) Cheques written by a firm generate collection float.
• B) Cheques received by a firm create disbursement float.
• C) In general, a firm's disbursement activities and its collection activities generate float.
• D) A firm's float is negative when its available balance equals its book balance.
• E) A firm cannot exploit float by using the cash needed to cover a cheque that has not yet cleared.

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Definitions:

Fluctuate

To change or cause to change in level, strength, or value frequently, without steadiness or consistency.

Foreign Exchange

The swapping of one type of currency for a different one or changing one type of currency into another.

Arbitrageurs

Market participants who buy and sell assets to profit from price discrepancies in different markets.

Foreign Exchange Markets

Financial markets where currencies are traded, facilitating international trade and investment by enabling currency conversion.