A company might hold a large amount of cash relative to noncash assets for which of the following reasons?
A)Part of its operations includes low-tax foreign jurisdictions.
B)Operating risks are high.
C)Dividends are not typically paid to shareholders.
D)All of the other answers represent reasons for large cash holdings.

Question

Quizplus · Accepted Answer

Each of the reasons listed in choices A, B, and C could lead a company to hold more cash relative to noncash assets. Therefore, the best answer is D, which encompasses all of these possibilities.

A Company Might Hold a Large Amount of Cash Relative