Which of the Following Scenarios Is an Example of the Precautionary

Multiple Choice

Which of the following scenarios is an example of the precautionary motive to hold cash?

A) A retailer holds a reserve of cash in case customers return products for a cash refund.
B) A bank holds cash on deposit for its customers.
C) A car dealership holds cash to pay its utility bill.
D) A small business pays a cash dividend to its owner because she's not sure she will have enough funds to pay for Christmas gifts for her family.