Which of the Following Statements Is Correct

question 1

Multiple Choice

Which of the following statements is correct?

• A) The cash balances of most firms consist of transactions,compensating,precautionary,and speculative balances.The total desired cash balance can be determined by calculating the amount needed for each purpose and then summing them together.
• B) The easier a firm's access to borrowed funds the higher its precautionary balances will be,in order to protect against sudden increases in interest rates.
• C) For some firms,holding highly liquid marketable securities is a substitute for holding cash because the marketable securities accomplish the same objective as cash.
• D) Firms today are more likely to rely on cash than on reserve borrowing power or marketable securities for speculative purposes because of the need to move quickly.
• E) Each of the above statements is false.

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Definitions:

Shared Power Strategy

a cooperative approach to decision-making and leadership where control and authority are distributed among multiple stakeholders.

High Commitment

A work approach characterized by dedication and a strong sense of responsibility towards organizational goals.

Internalization

The process of incorporating or integrating beliefs, values, standards, or norms into one's own psychological structure, so they guide one's behavior without external enforcement.

Rational Persuasion Strategy

An approach that involves using logical arguments and factual evidence to convince others.