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8. A firm's target cash balance should be set as the smaller of(1) its transaction balance plus a precautionary (safety stock)balance or (2) its required compensating balance.a. True b. False9. Target cash balances are generally not affected bycompensating balance requirements except during periods of highinterest rates and tight money.a. True b. False10. The primary purpose of compensating balances required ofborrowers is to compensate the bank in the event the borrowerdefaults on the loan.a. True b. False11. If a firm has a large percentage of accounts over 30 daysold, it is a sign that the firm's receivables management needs tobe reviewed and improved.a. True b. False13. If you receive some goods on April 1 with the followingterms; 3/20, net 30, June 1 dating, it means that you will receivea 3 percent discount if the bill is paid on or before June 20 andthat the full amount must be paid 30 days after receipt of thegoods.a.True b. False