1. To be included in cash on hand cash must be:

a) available instantaneously.

b) available almost instantaneously.

c) next day available.

d) available for borrowing immediately.

2. Investments in short-term marketable securities are categorized as:

a) operational investments.

b) speculative investments.

c) strategic investments.

d) near-cash investments.

3. Which of the following is not an example of a near-cash item?

a) Treasury bonds

b) Commercial paper

c) Treasury bills

d) Bankers acceptances

4. What is the optimal amount of cash a firm should hold?

a) As much as possible

b) Just enough to pay for purchases

c) Enough to be liquid

d) None

5. What determines the optimum amount of cash a firm should hold?

a) The motives for the use of the cash

b) The firms borrowing capacity

c) a and b

d) None of the above determines the optimum amount of cash a firm should hold