What Is the Optimal Amount of Cash a Firm Should

question 38

Multiple Choice

What is the optimal amount of cash a firm should hold?

• A)As much as possible
• B)Just enough to pay for purchases
• C)Enough to be liquid
• D)None

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Definitions:

Efficiency

The ability to accomplish a task or a set of tasks with the minimum expenditure of time and resources.

Equity

Fairness or justice in the way people are treated and decisions are made, often relating to economic policies or distribution of resources.

Capital Flows

The transfer of funds to support trade, investment, or business activities, domestically or across borders.

Short-run Profits

The profit earned by a firm during a period where at least one input is fixed, typically analyzed to understand performance without long-term adjustments.