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Why Is It Important for fiRms to Maintain a Minimum

question 18

Essay

Why is it important for firms to maintain a minimum cash balance when the cost of doing so is
greater than the return generated by the funds held in reserve?


Definitions:

Complementary Good

A product or service that is used together with another product or service, increasing demand for one another.

Normal Good

A type of good for which demand increases as the income of the consumer increases.

Popcorn

A type of corn kernel which expands and puffs up when heated, commonly seasoned and served as a snack.

DVDs

Digital Versatile Discs, a type of optical storage media used for storing data, including movies and software.

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