The industry in which a firm operates has relatively little effect on the relative amounts of transaction cash held.

Question

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The industry in which a firm operates can have a significant effect on the relative amounts of transaction cash that it holds. For example, a firm in a highly regulated industry may need to hold more cash to comply with regulatory requirements, while a firm in a more volatile industry may need to hold more cash to weather economic downturns.

The Industry in Which a Firm Operates Has Relatively Little