The cash balances of most firms consist of transactions, compensating, and precautionary balances. The total desired cash balance can be determined by calculating the amount needed for each purpose and then summing them together. b. The easier a firm’s access to borrowed funds, the higher its precautionary balances will be in order to protect against sudden increases in interest rates. c. For some firms holding highly liquid marketable securities is a substitute for holding cash, because the marketable securities accomplish the same objective as cash. d. All companies hold the same amount of funds for a transaction balance. e. None of the statements above is correct.

An employer who is considering hiring eva has asked donna, eva’s former supervisor, for a report on eva. in truth, eva’s work for donna has been only average. however, eva is donna’s friend, and donna knows that eva probably will not get the job if she says anything negative about eva, and donna knows that eva desperately needs the job. further, donna knows that if the situation were reversed, she would not want eva to mention her deficiencies. nevertheless, it has been donna’s policy to reveal the deficiencies of employees when she has been asked for references by employers, and she knows that some of eva’s faults may be bothersome to this particular employer. finally, this employer has leveled with donna in the past when donna has asked for a report on people who have worked for him. should donna reveal deficiencies in eva’s past performance? (remember to use one of the three moral theories acceptable for this test to solve this dilemma. any discussion of any personal opinion, religious perspective, or theory other than the moral theories acceptable for this test will result in a score of "0" for this question.)