Which of the Following Would Be an Example of the "Precautionary

question 29

Multiple Choice

Which of the following would be an example of the "precautionary motive" for a firm holding cash balances?

• A) purchase of inventory
• B) anticipating a strike
• C) purchase fixed assets
• D) make dividend payments

---

Definitions:

Competitive Advantage

A condition or circumstance that places a company in a superior business position compared to its competitors, often resulting from unique resources, capabilities, or strategies.

Advantage

A favorable or beneficial condition, circumstance, or position that improves one's ability to achieve success.

Competitors

Entities that compete within the same market, offering similar products or services to the same customer base.

Competitive Advantage

Competitive advantage occurs when a business possesses a unique feature, capability, or position that allows it to outperform competitors.