Firms hold cash, in part, to satisfy compensating balances.Compensating balances are:
A) cash balances held at the firm in excess of its transactions needs.
B) cash balances held at the firm that are below that of its transactions needs.
C) cash balances held at the firm in excess of its cash inflows.
D) cash balances held at commercial banks to pay implicitly for bank services.
E) None of the above.
Correct Answer:
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