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Which of the following is true regarding the opportunity costs of holding cash and the...

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Finance

Which of the following is true regarding the opportunity costs of holding cash and the size of the cash balance held by a firm?

Opportunity costs are minimized at the optimal cash balance.

There is no relationship between cash balances and opportunity costs.

If a firm can reduce its collection float, opportunity costs will rise and the optimal cash balance for the firm will be decreased.

The higher the cash balance, the higher the opportunity cost.

If a firm can reduce its collection float, opportunity costs will fall and the optimal cash balance for the firm will be increased.

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