If a fiRm Has Achieved Its Target Cash Balance the Net

question 83

Multiple Choice

If a firm has achieved its target cash balance the net present value is:

• A)positive because the cash balance is positive.
• B)zero because increasing the cash balance increases the interest cost.
• C)negative because the cash balance has a financing cost.
• D)positive because decreasing the cash decreases the cost of illiquidity.
• E)None of the above.

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Definitions:

Lemon Juice Test

A psychological test used to measure introversion and extroversion based on the saliva production in response to tasting lemon juice.

Neuroticism

This personality dimension involves a high propensity for experiencing negative emotions, such as anger, anxiety, or depression, more frequently and intensely than others.

Introverted

A personality trait characterized by a preference for solitary activities and environments that are not overly stimulating; introverts tend to be more internal in their focus.

Extraverted

A personality trait characterized by orientation of interests towards the external world and other people, rather than the internal, subjective world.