A Firm with Unpredictable Cash Flows Is Trying to Set

question 71

Multiple Choice

A firm with unpredictable cash flows is trying to set upper and lower limits for cash balances.Which of the following factors will result in upper and lower limits being closer to each other?

• A)variance of the cash flows is low
• B)cost of trading securities is high
• C)interest rate is low
• D)current cash balance is low

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Definitions:

Chemical Transmitter

Substances released by neurons to transmit signals across a synapse to another nerve cell, often referred to as neurotransmitters.

Bloodstream

The blood circulating through the body of a person or animal, carrying oxygen, nutrients, and waste products.

Target Organ

A specific organ or tissue upon which a hormone, drug, or other substance acts or exerts its effects.

ADH

Antidiuretic hormone, also known as vasopressin, which helps regulate the body's retention of water by increasing water reabsorption in the kidneys.