Which of the Following Is True Regarding Float Costs and the Size

question 302

Multiple Choice

Which of the following is true regarding float costs and the size of the optimal cash balance held by a firm?

• A) Float costs impact the optimal cash balance as determined by the BAT model only.
• B) The higher the cash balance, the lower the float cost.
• C) The lower the cash balance the lower the float cost.
• D) Float costs have no impact on the size of the optimal cash balance.
• E) Float costs increase the variance of cash flows per period, and thus the optimal cash balance.

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Definitions:

Microsystem

In ecological systems theory, this term refers to the immediate environments with which an individual interacts, such as family, school, and workplace.

Critical Period

A specific time frame in the early stages of an organism's life during which it is particularly sensitive to certain environmental stimuli that are essential for proper development.

Human Fetus

A developing human from the end of the embryonic period, approximately nine weeks after fertilization, until birth.

Sensitive Period

A critical phase in early development where the individual is particularly receptive to certain stimuli and capable of acquiring specific skills or knowledge.