Which of the following scenarios is an example of the speculative motive to hold cash?
A)An oil refining company holds cash to make special purchases of petroleum if the price temporarily drops below a predetermined level.
B)A government holds cash to make interest payments on its bonds.
C)A small business holds cash that it will use to purchase equipment at the end of the year.
D)A firm holds cash to pay its employee wages.

Question

Quizplus · Accepted Answer

The speculative motive to hold cash is to take advantage of potential future opportunities, such as buying assets at lower prices. in this scenario, the oil refining company is holding cash in anticipation of a drop in petroleum prices to make a purchase at a lower price.

Which of the Following Scenarios Is an Example of the Speculative