According to the transaction motive,businesses hold liquid assets because:

Question

Quizplus · Accepted Answer

The transaction motive suggests that businesses hold liquid assets, such as cash, to meet the short-term cash inflows and outflows that are not perfectly matched in both timing and amount. This helps to ensure that they have enough cash on hand to cover their expenses and maintain their daily operations. Option A is also a possibility, but it is more closely associated with the precautionary motive. Option B is related to the speculative motive, which is not relevant to the transaction motive. Option C is too narrow and does not capture the full scope of the transaction motive.

According to the Transaction Motive,businesses Hold Liquid Assets Because