If the Volatility of the Daily Cash Flows Decreases, a Firm

question 95

Multiple Choice

If the volatility of the daily cash flows decreases, a firm will:

• A)increase the cash balance.
• B)decrease the cash balance.
• C)not change the cash balance.
• D)increase the return point.

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Definitions:

Marginal Benefits

The improvement in benefit or utility realized by consuming or producing one more unit of a good or service.

Least-Cost Production

An economic principle where firms seek to produce their output at the minimum possible cost to maximize efficiency and profitability.

Inward Shift

A movement towards the origin of a supply or demand curve, indicating a decrease in supply or demand for a product.

Production Possibilities Curve

A graph representing the maximum combination of goods and services that can be produced with available resources and technology.