Firms and businesses hold some of their assets in the form of money because:

Question

Quizplus · Accepted Answer

Holding assets in the form of money allows firms and businesses to make purchases directly, which is a convenient and efficient way to manage their transactions. Money is highly liquid and can be easily exchanged for goods and services.

B, C, and D are incorrect because: 
B) Money is not always classified as M2, which includes broader measures of money supply that include savings deposits, time deposits, and other similar types of assets.
C) Bonds may offer higher rates of return compared to money, but they are less liquid and cannot be easily used to make direct purchases. 
D) Interest rates on money may vary depending on market conditions and other factors, and may not always be lower than other types of assets.

Firms and Businesses Hold Some of Their Assets in the Form