Question

__refers to a firm holding some
cash to meet its routine expenses that are
incurred in the ordinary course of business.
A. Speculative motive
B. Transaction motive
C. Precautionary motive
D. Compensating motive​

Answer 1

Answer:

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Answer 2

The answer is B) Transaction motive.

• The transaction motive is the holding of cash that is used to meet the daily expenditure of the firm.

• Speculative motive refers to the holding of the cash for attracting investments requiring cash expenditure.

• Precautionary motive refers to the holding of some cash that can be used to deal with unexpected issues effectively.

• The compensating motive refers to the minimum amount of balance that must be held by the firm to be able to hold a current account.

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