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:

Situational Factors

External conditions or events that influence an individual's behavior or outcomes, often beyond their control.

Personal Factors

Characteristics inherent to an individual that influence behavior and performance, such as personality traits, values, and abilities.

Operant Conditioning

Is the control of behavior by manipulating its consequences.

Negative Reinforcement

Strengthens a behavior by making the avoidance of an undesirable consequence contingent on its occurrence.