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Basic Question 11 of 15
Which one of the following is true regarding cash management?
B. A cost of holding cash is the interest income earned on the outstanding cash balance.
C. A firm should decrease its cash holdings as long as the net present value (NPV) of doing so is negative.
D. Effective cash management results in minimization of the total interest earnings involved with holding cash.
A. The basic objective of cash management is to keep the investment in cash as low as possible while still operating efficiently and effectively.
B. A cost of holding cash is the interest income earned on the outstanding cash balance.
C. A firm should decrease its cash holdings as long as the net present value (NPV) of doing so is negative.
D. Effective cash management results in minimization of the total interest earnings involved with holding cash.
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Learning Outcome Statements
describe issuers' objectives and compare methods for managing working capital and liquidity
CFA® 2024 Level I Curriculum, Volume 2, Module 4.