GT Motors Regularly Issues Short-Term Debt to Finance Its Daily

question 69

Multiple Choice

GT Motors regularly issues short-term debt to finance its daily operations.Suddenly,the credit markets froze and no funds were available for borrowing.Fortunately,the firm had some cash reserves saved that it was able to use to fund its operations until additional credit was available.The need to retain cash for situations such as this is referred to as which one of the following motives for holding cash?

• A)speculative
• B)float
• C)compensating
• D)precautionary
• E)transaction

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Definitions:

Per-Unit Tax

A tax that is levied on a product based on a fixed amount per unit sold, not based on the value of the product.

Quantity Tax

A tax that is levied on a specific amount or quantity of a good or service, rather than on its value.

Lost Revenue

Revenue that was expected but not received, often due to unforeseen circumstances or decisions leading to missed opportunities.

Long-Run Cost Curve

A graphical representation showing the minimum cost at which any given level of output can be produced in the long run, where all inputs are variable.