The Level of Cash a Firm Holds Is Irrelevant; It

question 25

True/False

The level of cash a firm holds is irrelevant; it can never be short of cash since a firm is able to raise new money instantly at a fair rate, while it can never have surplus cash since the firm can invest excess cash at a fair rate to earn a net present value (NPV) of zero.

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Definitions:

Confidence

A feeling of self-assurance arising from an appreciation of one's own abilities or qualities.

Competence

The ability of an individual or organization to perform a task effectively, with the required skills and knowledge.

Goal-Setting Theory

A psychological theory that suggests specific and challenging goals along with appropriate feedback contribute to higher and better task performance.

Rewards

Benefits, either tangible or intangible, given in recognition of one's service, effort, or achievement.