Which of the Following Statements Is Correct

question 1

Multiple Choice

Which of the following statements is correct?

• A) The cash balances of most firms consist of transactions,compensating,precautionary,and speculative balances.The total desired cash balance can be determined by calculating the amount needed for each purpose and then summing them together.
• B) The easier a firm's access to borrowed funds the higher its precautionary balances will be,in order to protect against sudden increases in interest rates.
• C) For some firms,holding highly liquid marketable securities is a substitute for holding cash because the marketable securities accomplish the same objective as cash.
• D) Firms today are more likely to rely on cash than on reserve borrowing power or marketable securities for speculative purposes because of the need to move quickly.
• E) Each of the above statements is false.

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Definitions:

Declarative Memories

Memories that can be consciously recalled, such as facts and events, and expressed verbally.

Anterograde Amnesia

A loss of the ability to create new memories after the event that caused the amnesia, leading to a partial or total inability to recall the recent past.

Iconic Memory

A component of the visual memory system which includes a very brief (<1 second) recall of visual images.

Echoic Memory

A subsystem of sensory memory that retains auditory information for a short period after the original sound has ceased.