Firms would need to hold zero cash when transactions related needs are:

Question

Quizplus · Accepted Answer

When transactions related needs are perfectly synchronized with cash inflows, firms would not need to hold any cash as they would receive the exact amount needed to cover their expenses at the same time. Therefore, option D is the correct choice. Options A, B and C suggest an imbalance between transaction needs and cash inflows, which would require firms to hold cash to cover any shortfalls. Option E is not correct as one of the options provided is correct.

Firms Would Need to Hold Zero Cash When Transactions Related