What are some of the reasons (and there are 4 primary reasons) that a firm might want to hold some cash reserves on hand? And what is the downside of holding too much cash?
The four primary reasons are
1. Transaction motive - Here cash is kept to meet the day to day cash needs of a firm
2. Precautionary motive - Here the cash is kept as a precaution for any unforeseen situation that may arise and ...
The solution explains the four reasons to hold cash reserves and their downsides