Which of the Following Is NOT a Fundamental Factor Ignored

question 120

Multiple Choice

Which of the following is NOT a fundamental factor ignored by the target cash balance models?

• A) Firms have the option to borrow short-term to meet unexpected demands for cash.
• B) The costs and delays of trading securities have fallen dramatically since the advent of the Internet.
• C) Many large firms habitually use all or the majority of their available cash to purchase overnight securities.
• D) Models take into account that many firms must keep compensating balances in their deposit accounts as part of borrowing agreements with their banks.

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