Assuming That the Firm Can Either Hold Cash Paying No

question 67

Multiple Choice

Assuming that the firm can either hold cash paying no interest or invest in marketable securities, which of the following might induce the manager to hold higher cash balances?

• A)the cost of borrowing is high relative to interest rates on marketable securities
• B)future cash flows are relatively predictable
• C)the cost of cash balances is relatively high
• D)bank interest rates are expected to increase

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Definitions:

Positive Feelings

Emotions or sentiments that are pleasant, uplifting, and contribute to a sense of well-being or happiness.

Self-evaluations

A process by which individuals assess their own abilities, performances, and qualities.

Performance

Performance refers to the act of carrying out or accomplishing an action, task, or function.

Negotiation Stage

A phase in the negotiation process where parties discuss, propose, and approach mutual agreement.