Author Question: A company that has an unpredictable cash flow, and is holding cash because of things that might ... (Read 194 times)

karen · **on:** Jul 10, 2018

A company that has an unpredictable cash flow, and is holding cash because of things that might
happen due to this uncertainty, is holding a larger minimum cash balance due to which type of
motive?

A) common sense B) precautionary C) transaction D) speculative

Question 2

Answer the following two questions. Assume that the portfolio weights are positive:

(1 ) Can the return on a portfolio ever be less than the smallest return on an individual security in the portfolio?
(2 ) Can the risk (variance) of a portfolio ever be less than the smallest risk (variance) of an individual security in the portfolio?
A) No. Yes.
B) No. No.
C) Yes. No.
D) Yes. Yes.