Question #76169
8. There are several motives for holding assets in the form of money. What are they? Provide an example of each.
Expert's answer
1) Transaction motive:
Money for everyday transactions
2) Precautionary motive:
Money for unexpected payment
3) Speculative motive:
If the firm feels the prices of raw material are likely to fall in the future, it will hold cash and wait till the prices actually fall.
Money for everyday transactions
2) Precautionary motive:
Money for unexpected payment
3) Speculative motive:
If the firm feels the prices of raw material are likely to fall in the future, it will hold cash and wait till the prices actually fall.
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