Which of the Following Actions in Managing the Cash Account

question 7

Multiple Choice

Which of the following actions in managing the cash account would, in general, either not be feasible or else not be consistent with the firm's wealth maximization objective?

• A)Increase synchronization of inflows and outflows.
• B)Use drafts for disbursing funds.
• C)Use a lockbox plan.
• D)Maintain an average balance which is equal to that required as a compensating balance or that which minimizes total cash management costs, whichever is lower.
• E)None of the above (all would be feasible and consistent actions).

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Definitions:

Ad Valorem Tariffs

A type of tariff calculated as a percentage of the value of the imported goods, as opposed to a fixed fee per unit.

Specific Tariffs

Taxes imposed on imported goods at a specific rate per unit, such as per ton or per item, instead of a percentage of value.

Tariff

A tax imposed on imported goods to protect domestic industries or to generate revenue.

Imports

Goods and services bought by residents of a country from other countries.