Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
| Adjustment Costs | The costs associated with holding too little cash. Also shortage costs.
(See Refer to page 640)
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| Debit Card | An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account.
(See Refer to page 650)
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| Dividend Capture | A strategy in which an investor purchases securities to own them on the day of record and then quickly sells them; designed to attain dividends but avoid the risk of a lengthy hold.
(See Refer to page 656)
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| Float | The difference between book cash and bank cash, representing the net effect of cheques in the process of clearing.
(See Refer to page 643)
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| Lockboxes | Special post office boxes set up to intercept and speed up accounts receivable payments.
(See Refer to page 648)
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| Precautionary Motive | The need to hold cash as a safety margin to act as a financial reserve.
(See Refer to page 639)
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| Same Day Value | Bank makes proceeds of cheques deposited available the same day before cheques clear.
(See Refer to page 650)
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| Smart Card | Much like an automated teller machine card; one use is within corporations to control access to information by employees.
(See Refer to page 648)
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| Speculative Motive | The need to hold cash to take advantage of additional investment opportunities, such as bargain purchases.
(See Refer to page 639)
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| Target Cash Balance | A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.
(See Refer to page 640)
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| Transaction Motive | The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations.
(See Refer to page 639)
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| Zero-Balance Account | A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented.
(See Refer to page 652)
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2002 McGraw-Hill Higher Education