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Which Best Describes Why Firms Hold Cash Balances

Question 115

Multiple Choice

Which best describes why firms hold cash balances?


A) Firms hold cash balances in order to complete transactions that are necessary in business operations and as compensation to banks for providing loans and services.
B) Firms hold cash balances in order to pay dividends and long-term debts off.
C) Firms hold cash balances in order to complete transactions that are necessary in business operations.
D) Firms hold cash balances solely as compensation to banks for providing loans and services.

Correct Answer:

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