Part 1

Can a firm have too much cash?

No, since more cash increases profits.

Yes, since high cash balances create an opportunity cost.

No, since more cash increases cash flow.

Yes, since high cash balances increase bank fees.

Submit

Attempt 1/5 for 8.5 pts.

Part 2

Which group of investors is likely to want to hold more cash?

Bondholders, since they'll benefit from the higher returns on cash.

Shareholders, since it reduces the risk of default on the next dividend payment.

Shareholders, since they'll benefit from the higher returns on cash.

Bondholders, since it reduces the risk of default on the next interest payment.

Submit

Attempt 1/5 for 8.5 pts.

Part 3

Which are means of reducing excess cash?

Check all that apply:

Pay suppliers more quickly

Repurchase stocks

Tighten the credit policy

Pay back some debt

Submit