Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises.Which type of motive for holding cash does this represent?
A)Speculative
B)Float requirement
C)Transaction
D)Precautionary
E)Availability

Question

Quizplus · Accepted Answer

The extra $1,500 in Laurie's Ice Rink's checking account represents a precautionary motive for holding cash. In other words, the cash is being held as a buffer or safety net in case an unexpected emergency comes up.

Laurie's Ice Rink Keeps an Extra $1,500 in Its Checking