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

question 60

Multiple Choice

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

• A) make dividend payments
• B) anticipating a strike
• C) purchase of inventory
• D) take advantage of an anticipated decline in the price of raw materials

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary by income level, type of income, or legal entity.

CCA Tax Shield

A deduction that Canadian businesses can claim for the depreciation of tangible property, reducing taxable income.

After-Tax Annual Lease Payment

The amount of lease payments due each year after accounting for the tax effects.

After-Tax Discount Rate

The discount rate after adjusting for taxes, used to evaluate investments and their future cash flows after tax implications.