Which of the Following Statements Is Most Correct

question 97

Multiple Choice

Which of the following statements is most correct?

• A) The cash balances of most firms consist of transactions, compensating, and precautionary balances. The total desired cash balance can be determined by calculating the amount needed for each purpose and then summing them together.
• B) The easier a firm's access to borrowed funds, the higher its precautionary balances will be in order to protect against sudden increases in interest rates.
• C) For some firms holding highly liquid marketable securities is a substitute for holding cash, because the marketable securities accomplish the same objective as cash.
• D) All companies hold the same amount of funds for a transaction balance.
• E) None of the statements above is correct.

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Definitions:

Organizational Obligation

Duties or responsibilities that an organization is bound to perform or adhere to, often ethically or legally.

Society Interests

Collective concerns, objectives, or priorities that are considered beneficial for the community as a whole.

Organizational Mission

A statement that outlines an organization's purpose, identifying its scope of operations and guiding its strategic planning.

Market Strategy

A comprehensive plan that outlines how a business will reach potential consumers and turn them into customers of their products or services.