Assuming That the Firm Can Either Hold Cash Paying No

question 13

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:

Neonate

A newborn baby, especially in the first few weeks of life.

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An individual's plans or motivations to carry out a specific behavior or action.

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The degree to which a developing structure or behavior is modifiable due to experience.

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The elimination of neurons as the result of nonuse or lack of stimulation.