BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Transaction motive refers to a firm holding some cash to meet its routine expenses that are incurred in the ordinary course of business.

Detailed explanation-2: -Transaction motive refers to the requirement of cash by the business for its day-to-day operations. In general, the firm requires cash for payment of salary, rent, labor payment, purchase of goods, etc. On the receipt side, the firm receives cash from sale of goods, debtors etc.

Detailed explanation-3: -The benefits of holding cash include minimising the transaction costs associated with raising external funds or liquidating assets (’the transactions motive’) and being able to finance projects in case other sources become too costly (’the precautionary motive’).

Detailed explanation-4: -The transactions motive for holding cash relates to ‘the need for cash for current transactions for personal and business exchange. ‘ The need for holding money arises because there is lack of synchronization between receipts and expenditures.

Detailed explanation-5: -The transactional motive refers to individuals holding money for the sake of buying goods and services to improve their quality of life. The speculative motive refers to the desire to hold money for the purpose of investing and growing wealth over time.