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AnhNguyenFI515Week7Lab - 22-2 The two principal reasons for...

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22-2 22-4 22-2 (Problems) 22-3 (Problems) The two principal reasons for holding cash are for transactions and compensating balances. The target cash balance is not equal to the sum of the holdings for each reason because the same money can often partially satisfy both motives. The four elements in a firm’s credit policy are (1) credit standards, (2) credit period, (3) discount policy, and (4) collection policy. The firm is not required to accept the credit policies employed by its competition, but the optimal credit policy cannot be
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