What is a speculative balance sheet?

We highlight companies that use their balance sheets to speculate in risky non-core assets. As such, we highlight companies which have investment securities on their balance sheet and where returns on cash and cash equivalents are unusually high. …

What is meant by speculative motive?

Definition: It is a tactic used by investors/ traders to hold cash so as to make the best use of any investment opportunity that arises later on. In such a situation, the cash kept aside by the investor equips him to exploit such an attractive investment opportunity. …

What is an example of speculative demand?

Speculative Demand for Money and Asset Prices In general, an investor who chooses to hold money instead of financial instruments, such as bonds, is giving up the return he/she can earn holding such instruments.

What is the speculative demand motive for money balances?

In Keynesian economics, a need for money for investment purposes. That is, speculative demand for money is the desire to have money for transactions other than those necessary for living. Speculative demand includes risk capital for securities.

What is compensating cash balance?

A compensating balance is a minimum bank account balance that a borrower agrees to maintain with a lender. The purpose of this balance is to reduce the lending cost for the lender, since the lender can invest the cash located in the compensating bank account and keep some or all of the proceeds.

What is stock balance sheet?

In accounting there are two common uses of the term stock. One meaning of stock refers to the goods on hand which is to be sold to customers. In that situation, stock means inventory. The term stock is also used to mean the ownership shares of a corporation.

What is speculative resource?

Undiscovered resources that may occur either in known types of deposits in favorable geologic settings where mineral discoveries have not been made, or in types of deposits as yet unrecognized for their economic potential.

Why does a company maintain speculative balance?

3. Speculative Motive: Sometimes, firm hold high cash balances over the precautionary level of cash balance to take advantage of speculative investment opportunities, to exploit discounts for prompt payments, to improve credit rating etc. But it is to be kept in view that idle cash will attract opportunity cost.

What is speculative interest?

Speculative interest as used in this section, means that the original developer or a successor developer retains ownership in any lot abutting such street for development or speculative purposes.

When do people want to hold speculative balances?

When the interest rate is very low and bond prices are high, then: people will want to hold speculative balances because the opportunity cost in terms of interest forgone is small; there will be a general expectation of a rise in the interest rate, with a consequent fall in bond prices, and thus the preference is for cash holding.

How are speculative balances related to normal interest rates?

Speculative balances are associated with the concept of a ‘normal’ INTEREST RATE. Each holder of speculative balances has his own opinion of what this ‘normal’ rate is.

What is the definition of speculative demand for money?

Speculative demand is the holding of real balances for the purpose of avoiding capital loss from holding bonds or stocks. The net return on bonds is the sum of the interest payments and the capital gains (or losses) from their varying market value.

When is money used as a speculative instrument?

The money is held to take advantage of speculative opportunities or for covering/offsetting risks in other assets or the economy. There are several cases in which money is used as a speculative instrument: When there is deflation. Deflation Deflation is a decrease in the general price level of goods and services.