Asked by Kajal Verma on Jul 08, 2024
Verified
The costs of holding too little cash are called _____ costs.
A) Carrying.
B) Adjustment.
C) Maintenance.
D) Variable.
E) Total.
Carrying Costs
The total expenses associated with holding or maintaining an asset over time, including storage, insurance, and taxes.
Holding Cash
Maintaining a portion of one's assets in liquid cash form to meet immediate needs or prepare for future expenses or investment opportunities.
Total Costs
The complete amount of expenses incurred by a business or project, including both fixed and variable costs.
- Discern the liabilities associated with suboptimal or excessive cash levels, and the utility of money market mechanisms in liquidity administration.
Verified Answer
MZ
Migle ZUkauskaiteJul 13, 2024
Final Answer :
B
Explanation :
Adjustment costs refer to the expenses associated with adjusting the level of cash holdings, which can include transaction costs for converting other assets into cash or the opportunity costs of not having enough cash on hand to meet immediate needs.
Learning Objectives
- Discern the liabilities associated with suboptimal or excessive cash levels, and the utility of money market mechanisms in liquidity administration.