A Firm with Spare Cash

question 88

Multiple Choice

A firm with spare cash

• A) should always reinvest it in new equipment.
• B) should pay it out to shareholders unless the firm can earn a higher rate of return on the cash than the shareholders can earn by investing in the capital market.
• C) should invest it in the safest projects available.
• D) Should always invest it in U.S. equities.

---

Definitions:

Psychological Perspective

A viewpoint in psychology that emphasizes understanding human behavior by examining mental functions and processes.

Emotional Reactions

Responses characterized by intense feelings that occur in reaction to an external stimulus or internal thought process.

Sexual Motivation

A drive that influences humans to engage in behaviors related to physical attraction and reproduction.

Free Will

The concept of being able to make choices that are not predetermined by past events, often discussed in philosophy and psychology.