Speculative cash balances are held to take advantage of uncertain profit-making opportunities.

Question

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Speculative cash balances are in fact held for the purpose of taking advantage of uncertain profit-making opportunities. These balances are often used to invest in new ventures, acquire small businesses, or make other speculative investments that have the potential to generate high returns. While holding cash for speculative purposes does carry some risk, it can also provide businesses with a valuable source of financial flexibility and the ability to respond quickly to unexpected opportunities.

Speculative Cash Balances Are Held to Take Advantage of Uncertain