The primary reason(s) why firms hold liquid asset balances is (are) ______.

Question

Quizplus · Accepted Answer

Firms hold liquid asset balances for both transaction and precautionary purposes. Transaction purposes include the need to cover everyday expenses and pay suppliers, while precautionary purposes include the need to have a cushion to cover unexpected financial needs such as emergencies or a sudden decrease in revenue. The compensation of brokers for services rendered is unrelated to the firm's decision to hold liquid asset balances.

The Primary Reason(s) Why Firms Hold Liquid Asset Balances Is