The Traditional Argument for Maintaining Small Cash Balances Says That

question 3

Multiple Choice

The traditional argument for maintaining small cash balances says that:

• A)cash balances earn below market interest rates or no interest and should be kept to a minimum.
• B)the interest that is lost on cash balances is more than offset by the convenience of having cash readily available.
• C)cash balances should be held in multiple banks to offset the risk of any one bank failing.
• D)the amount of a firm's cash balance is inversely related to the firm's sales volume.

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Definitions:

Platt Amendment

1901 amendment to the Cuban constitution that reserved the United States’ right to intervene in Cuban affairs and forced newly independent Cuba to host American naval bases on the island.

Herbert Hoover

The 31st President of the United States, serving from 1929 to 1933, whose term was marked by the onset of the Great Depression.

America First Committee

A non-interventionist group formed in the United States prior to World War II that advocated for keeping the US out of the conflict.

Henry Ford

An American industrialist and the founder of Ford Motor Company, he revolutionized factory production with his assembly line methods.