A Firm with Unpredictable Cash Flows Is Trying to Set

question 119

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:

Separate Component

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Abraham Maslow

An American psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, leading to self-actualization.

Humanistic Psychology

A psychological perspective emphasizing individual potential, self-actualization, and the importance of free will and personal growth.

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