The Target Cash Balance Is Reached When

question 52

Multiple Choice

The target cash balance is reached when:

• A)the interest on any marketable security throw-off is maximized.
• B)the interest foregone from not investing in an equivalent amount of Treasury bills is minimized.
• C)the value of cash liquidity equals interest foregone on an equivalent amount of Treasury bills.
• D)the liquidity value is greater than interest foregone on an equivalent amount of Treasury bills.
• E)None of the above.

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Definitions:

FIFO System

A method of inventory valuation where goods first purchased or produced are the first to be sold or used, standing for "First In, First Out".

Investment Account

An account held at a financial institution that contains securities, cash, and other assets for investment purposes.

Subsidiary

A company that is controlled by another company, known as the parent company, through majority ownership.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.