Certified Management Accountant Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

The classification of holding cash under 'Speculative' motives primarily refers to the desire to capitalize on potential investment opportunities that may arise due to fluctuating market conditions. The correct answer, which focuses on temporarily investing cash when interest rates are favorable, aligns perfectly with this definition of speculative motives.

In this context, a company or individual may choose to hold cash not merely for immediate expenditure or liquidity needs but rather to take advantage of the opportunity to invest in securities or assets at a favorable interest rate. This can generate additional income or yield during times when the market conditions are advantageous. Therefore, this strategy can be seen as speculative because it involves anticipating future market movements rather than meeting operational or urgent cash requirements.

Meanwhile, other choices primarily tackle the fundamental needs of cash management, highlighting operational or precautionary motives. For instance, covering unpredictable cash needs or facilitating daily transactions represents a focus on liquidity management or operational stability, which are more aligned with transactional or precautionary motives rather than speculative ones. Preparing for unexpected expenses falls into a similar category, as it emphasizes safeguarding against uncertainties rather than aiming to leverage cash for investment gains.