Which of the Following Actions in Managing the Cash Account

question 57

Multiple Choice

Which of the following actions in managing the cash account would, in general, either not be feasible or else not be consistent with the firm's wealth maximisation objective?

• A) Increase synchronisation of inflows and outflows.
• B) Use drafts for disbursing funds.
• C) Use a lockbox plan.
• D) Maintain an average balance which is equal to that required as a compensating balance or that which minimises total cash management costs, whichever is lower.
• E) None of the above (all would be feasible and consistent actions).

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Definitions:

Penetration Pricing Strategy

A marketing strategy that involves setting a low price for a new product during its initial phase to attract customers and gain market share.

Dumping

The practice of exporting goods at a price lower than the home market price, often considered unfair trade and a subject of international dispute.

Predatory Pricing

A strategy where a company sets very low prices for its products with the intention of driving competitors out of the market.

Computer Manufacturing

The industrial process of producing computer hardware components and assembling them into complete systems or products.