11 May WHICH OF THE FOLLOWING IS NOT A MOTIVE FOR A CORPORATION TO HOLD CASH BALANCES?
A construction firm that accumulates cash in
anticipation of a significant drop in lumber costs is an example of the
________ motive for holding cash.
A) transaction
B) speculative
C) hedging
D) precautionary
52) Which of the following affects the precautionary motive
for holding cash?
A) the cash flow predictability
B) the firm’s access to external funds
C) both A and B
D) none of the above
53) A company that has an unpredictable cash flow, and is
holding cash because of things that might happen due to this uncertainty, is
holding a larger minimum cash balance due to which type of motive?
A) transaction
B) precautionary
C) speculative
D) common sense
54) Which of the following would be an example of the
“transactions motive” for a firm holding cash balances?
A) investing “excess cash balances”
B) anticipating a downturn in the economy
C) purchase of inventory
D) take advantage of an anticipated decline in the price of
raw materials
55) Which of the following would be an example of the
“precautionary motive” for a firm holding cash balances?
A) purchase of inventory
B) anticipating a strike
C) purchase fixed assets
D) make dividend payments
56) Which of the following would be an example of the
“speculative motive” for a firm holding cash balances?
A) make dividend payments
B) anticipating a strike
C) purchase of inventory
D) take advantage of an anticipated decline in the price of
raw materials
57) All of the following elements of a cash management
program will likely contribute to an increase in the value of the firm EXCEPT
A) collect cash more quickly.
B) slow down cash disbursements.
C) prepare more accurate cash flow forecasts.
D) increase cash balances for precautionary reasons.
58) A company is technically insolvent when
A) cash outflows in a given period are greater than cash
inflows.
B) earnings before interest payments are less than the
interest payments.
C) it lacks the necessary liquidity to promptly pay its
current debt obligations.
D) current ratio is less than 1.0.
59) Which of the following is NOT a motive for a
corporation to hold cash balances?
A) transactions
B) float
C) precautionary
D) speculative
60) When a corporation designs an investment strategy for
investing temporary excess cash balances in marketable securities, it must
consider a variety of factors. Which of the following is the least important?
A) liquidity
B) financial risk
C) achieving the highest yield
D) maintaining the safety of principal
51) A construction firm that accumulates cash in
anticipation of a significant drop in lumber costs is an example of the
________ motive for holding cash.A) transactionB) speculativeC) hedgingD) precautionary 52) Which of the following affects the precautionary motive
for holding cash?A) the cash flow predictabilityB) the firm’s access to external fundsC) both A and BD) none of the above 53) A company that has an unpredictable cash flow, and is
holding cash because of things that might happen due to this uncertainty, is
holding a larger minimum cash balance due to which type of motive?A) transactionB) precautionaryC) speculativeD) common sense 54) Which of the following would be an example of the
“transactions motive” for a firm holding cash balances?A) investing “excess cash balances”B) anticipating a downturn in the economyC) purchase of inventoryD) take advantage of an anticipated decline in the price of
raw materials 55) Which of the following would be an example of the
“precautionary motive” for a firm holding cash balances?A) purchase of inventoryB) anticipating a strikeC) purchase fixed assetsD) make dividend payments 56) Which of the following would be an example of the
“speculative motive” for a firm holding cash balances?A) make dividend paymentsB) anticipating a strikeC) purchase of inventoryD) take advantage of an anticipated decline in the price of
raw materials 57) All of the following elements of a cash management
program will likely contribute to an increase in the value of the firm EXCEPTA) collect cash more quickly.B) slow down cash disbursements.C) prepare more accurate cash flow forecasts.D) increase cash balances for precautionary reasons. 58) A company is technically insolvent whenA) cash outflows in a given period are greater than cash
inflows.B) earnings before interest payments are less than the
interest payments.C) it lacks the necessary liquidity to promptly pay its
current debt obligations.D) current ratio is less than 1.0. 59) Which of the following is NOT a motive for a
corporation to hold cash balances?A) transactionsB) floatC) precautionaryD) speculative 60) When a corporation designs an investment strategy for
investing temporary excess cash balances in marketable securities, it must
consider a variety of factors. Which of the following is the least important?A) liquidityB) financial riskC) achieving the highest yieldD) maintaining the safety of principal
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