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 quickly access funds for day-to-day activities such as paying suppliers, while precautionary purposes involve holding reserves to cover unexpected expenses or cash flow shortages. Compensation to brokers is not a primary reason for holding liquid assets.

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