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Principal reasons for holding cash

Question 1: What are the two principal reasons for holding cash? Can a firm estimate its target cash balance by summing the cash held to satisfy each of the two reasons?

Question 2: What are the four elements of a firm's credit policy? To what extent can firms set their own credit policies as opposed to having to accept policies that are dictated by "the competition"?

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Finance Basics: Principal reasons for holding cash

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