CAF-7 · Chapter 12 · Question 6 of 15
According to economic theory, there are three primary motives for a business to hold cash. Which motive relates to holding cash to take advantage of sudden, unexpected investment opportunities or favourable market price drops?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The speculative motive
Explanation
The speculative motive involves holding cash to be in a position to exploit unexpected opportunities, such as purchasing discounted raw materials or acquiring a struggling competitor at a bargain price.
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