Cash Management and Short-Term Investments Quiz
Test your knowledge on cash management objectives, techniques, and risks with these short-term investment questions. Enhance your financial skills!
#1
Which of the following is a primary objective of cash management?
Maximizing profitability
Minimizing liquidity
Minimizing cash balance
Minimizing credit sales
#2
Which of the following is not a motive for holding cash?
Transaction motive
Precautionary motive
Speculative motive
Investment motive
#3
Which of the following is NOT a component of cash management?
Cash budgeting
Cash disbursement
Cash inflow forecasting
Cash depreciation
#4
What is the primary purpose of a cash flow statement?
To evaluate a company's liquidity
To assess a company's profitability
To determine a company's market value
To calculate a company's income tax
#5
What is the primary goal of cash management?
Maximizing revenue
Minimizing expenses
Maintaining adequate liquidity
Optimizing shareholder returns
#6
What is the purpose of the Miller-Orr Model in cash management?
To determine optimal cash balance
To calculate inventory turnover
To measure credit risk
To evaluate investment opportunities
#7
What is the main function of a money market fund?
Providing long-term financing
Providing short-term financing
Issuing corporate bonds
Facilitating foreign exchange transactions
#8
What does the term 'float' refer to in cash management?
The act of floating bonds to raise capital
The difference between book balance and bank balance
The process of converting cash into investments
The interest earned on short-term investments
#9
Which of the following is NOT a commonly used cash management technique?
Cash pooling
Lockbox systems
Dynamic pricing
Sweep accounts
#10
Which of the following is a disadvantage of maintaining a high cash balance?
Increased liquidity risk
Reduced transaction costs
Enhanced investment opportunities
Improved credit rating
#11
Which of the following is a characteristic of Treasury Bills (T-bills)?
High liquidity and low risk
Low liquidity and high risk
High liquidity and high risk
Low liquidity and low risk
#12
What is the objective of a cash concentration system?
To diversify investment portfolio
To reduce transaction costs
To centralize cash from various accounts
To increase cash flow volatility
#13
Which of the following is a characteristic of commercial paper?
Long-term maturity
Issued by government entities
Highly liquid
Low credit quality
#14
What is the primary risk associated with investing excess cash in short-term securities?
Market risk
Credit risk
Interest rate risk
Operational risk
#15
Which of the following is a characteristic of repurchase agreements (repos)?
Fixed maturity date
Issued by government entities
High credit risk
Low liquidity
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