Firm should seek to hold as many liquid assets as possible

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The more liquid a firm is, the less likely it is to experience financial distress. Does this mean that a firm should seek to hold as many liquid assets as possible? Yes or no?

If a firm increases its use of debt, it magnifies its potential to earn higher shareholder returns. Should firms use as much debt as possible to maximize their ability to earn magnified shareholder returns? Yes or no?

Reference no: EM131855999

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