Question Question 1 Firms hold cash to satisfy the transaction motive. This means that cash is held: A. to meet disbursements for normal operations. B. to balance the flow between cash inflows and outflows. C. to make unexpected payments such as special price discounts. D. Both to meet disbursements for normal operations; and to balance the flow between cash inflows and outflows. E. None of these. 2 points Question 2 If the total long term financing of the firm is greater than the total financing needs for part of the year, and less than the needs for some of the year due to seasonal fluctuations, the company will most likely: A. hold excess cash. B. borrow short term and hold excess cash. C. hold excess cash and reduce business activities. D. invest in marketable securities and borrow short term. E. None of these. 2 points Question 3 The Timberline firm expects a total cash need of $12,500 over the next 3 months. They have a beginning cash balance of $1,500, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is $3.50. The interest rate on marketable securities is 8% per annum. There is a constant rate of cash disbursement and no cash receipts during the month. Based on the firm’s current practice, what is the average daily cash balance (a month has 30 days)? A. $50.00 B. $69.44 C. $94.44 D. $138.89 E. None of these. 2 points Question 4 The target cash balance is reached when: A. the interest on any marketable security throw-off is maximized. B. the interest foregone from not investing in an equivalent amount of Treasury bills is minimized. C. the value of cash liquidity equals interest foregone on an equivalent amount of Treasury bills. D. the liquidity value is greater than interest foregone on an equivalent amount of Treasury bills. E. None of these. 2 points Question 5 A financial manager should be concerned about bank cash and net float, which is the sum of: A. collection and book cash. B. collection float and disbursement float. C. disbursement float and book cash. D. disbursement float and bank credit. E. None of these. 2 points Question 6 On an average day, Tennis R Us writes checks totaling $2,000. These checks take 3 days to clear. The company receives checks totaling $1,800. These checks take 2 days to clear. The cost of debt is 8%. What is the firm’s net float? A. $-2,500 B. $-2,400 C. $2,400 D. $2,500 E. None of these. 2 points Question 7 Firms would need to hold zero cash when transactions related needs are: A. greater than cash inflows. B. less than cash inflows. C. not perfectly synchronized with cash inflows. D. perfectly synchronized with cash inflows. E. None of these. 2 points Question 8 Marketability risk is synonymous with: A. maturity risk. B. default risk. C. liquidity risk. D. interest rate risk. E. None of these. 2 points Question 9 The fastest but most expensive way to transfer surplus funds from the local deposit bank to the concentration bank is: A. a lockbox system. B. a mail float system. C. a wire transfer. D. an in-house processing float system. E. an availability float system. 2 points Question 10 On an average day, a company writes checks totaling $1,500. These checks take 7 days to clear. The company receives checks totaling $1,800. These checks take 4 days to clear. The cost of debt is 9%. What is the firm’s collection float? A. $-7,200 B. $-1,800 C. $1,800 D. $10,500 E. None of these. 2 points Question 11 A firm with low cash balances will need to borrow to cover an unexpected cash outflow: A. if it has high cash flow variability. B. if COGS decrease. C. if the firm maintains a zero lower control limit. D. Both if it has high cash flow variability and if COGS decrease. E. Both if it has high cash flow variability and if the firm maintains a zero lower control limit. 2 points Question 12 Firms hold cash, in part, to satisfy compensating balances. Compensating balances are: A. cash balances held at the firm in excess of its…
Looking for solution of this Assignment?
WHY CHOOSE US?
We deliver quality original papers |
Our experts write quality original papers using academic databases.We dont use AI in our work. We refund your money if AI is detected |
Free revisions |
We offer our clients multiple free revisions just to ensure you get what you want. |
Discounted prices |
All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount |
100% originality |
We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity.We have ZERO TOLERANCE TO USE OF AI |
On-time delivery |
We will deliver your paper on time even on short notice or short deadline, overnight essay or even an urgent essay |