The need to hold cash to satisfy the ongoing disbursement and collection activities of the firm...
The need to hold cash to satisfy the ongoing
disbursement and collection activities of the firm as part of its
daily operations is called the:
Select one:
a. Precautionary motive.
b. Speculative motive.
c. Float motive.
d. Transaction motive.
Homework Answers
Transaction motive is the need to hold cash to satisfy normal disbursements and collection activities associated with a firms ongoing operations. Precautionary motive is the desire to keep extra money incase of an unforeseen situation requires a capital outlay.
Speculative motive is the desire to hold cash in order to be poised to exploit any attractive investment opportunities requiring cash expenditure that may arise.
Hence, option D is the correct answer.
SUMMARY:
For holding cash to satisfy the ongoing disbursement and collection activities, it is known as transaction motive. Example is paying salaries, wages and collection of revenue etc.
Hence, option D is the correct answer.
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The need to hold cash to satisfy the ongoing
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