Exhibit 10-5 The Following Information Was Obtained from Matched Samples

question 45

Multiple Choice

Exhibit 10-5
The following information was obtained from matched samples.
-Refer to Exhibit 10-5. If the null hypothesis is tested at the 5% level, the null hypothesis

• A)should be rejected
• B)should not be rejected
• C)should be revised
• D)None of these alternatives is correct.

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Definitions:

Target Cash Balance

The optimal amount of cash that a company aims to hold to meet expected transactions, precautionary, and speculative needs.

Speculative Motive

The intent to hold cash or other assets for the purpose of benefiting from future market movements.

Precautionary Motive

The desire to hold cash or liquid assets to guard against unforeseen future needs and emergencies.

Transaction Motive

The need for cash to meet immediate and anticipated demands for payment, a key reason for holding cash in business.