The _____ for Holding Money Explains Why a ?Rm Holds

question 39

Multiple Choice

The _____ for holding money explains why a ?rm holds extra cash just in case payments from customers are delayed.

• A) asset motive
• B) precautionary motive
• C) transaction motive
• D) pro?t motive

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Definitions:

Real Rate

The real rate is the rate of interest an investor expects to receive after allowing for inflation, essentially reflecting the real cost of funds to the borrower and the real yield to the lender.

Spot Exchange Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.

Yen

The official currency of Japan, commonly used in international finance as one of the world's major currencies.

Spending Money

Funds allocated for personal, discretionary use, typically for purchases outside of essential living expenses.