Which of the Following Actions in Managing the Cash Account

question 7

Multiple Choice

Which of the following actions in managing the cash account would, in general, either not be feasible or else not be consistent with the firm's wealth maximization objective?

• A)Increase synchronization of inflows and outflows.
• B)Use drafts for disbursing funds.
• C)Use a lockbox plan.
• D)Maintain an average balance which is equal to that required as a compensating balance or that which minimizes total cash management costs, whichever is lower.
• E)None of the above (all would be feasible and consistent actions).

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Definitions:

Normative Social Influence

The sway of peers that motivates us to adapt our behaviors to be favored and embraced by them.

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms, politics or being similar to others.

Social Loafing

The situation where people show lower levels of effort in pursuing a goal while in a group setting than they do when working individually.

Blindfolded Students

Individuals who have their vision temporarily obstructed by a covering over their eyes, often used in experiments to study sensory deprivation or reliance on other senses.