Chrysler Corp. held large sums of cash during the mid-1990s primarily because it would need a large amount of cash in the event of a recession. This is a (n) _____________ for holding cash.

Question

Quizplus · Accepted Answer

The precautionary motive for holding cash refers to the need to have funds on hand for unexpected situations, such as a recession. Chrysler Corp. holding large sums of cash to prepare for potential economic downturns aligns with this motive, as it provides a buffer to manage unforeseen financial challenges.