Firms hold cash to satisfy the transaction motive. This means that cash is held:

Question

Firms hold cash to satisfy the transaction motive. This means that cash is held:

A. to meet disbursements for normal operations.

B. to balance the flow between cash inflows and outflows.

C. to make unexpected payments such as special price discounts.

D. Both to meet disbursements for normal operations; and to balance the flow between cash inflows and outflows.

E. None of these.

A. to meet disbursements for normal operations.

B. to balance the flow between cash inflows and outflows.

C. to make unexpected payments such as special price discounts.

D. Both to meet disbursements for normal operations; and to balance the flow between cash inflows and outflows.

E. None of these.

Explanation / Answer

D. Both to meet disbursements for normal operations; and to balance the flow between cash inflows and outflows.

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