Which one of the following is true regarding cash management?

A. The basic objective of cash management is to keep the investment in cash as low as possible while still operating efficiently and effectively.
B. A cost of holding cash is the interest income earned on the outstanding cash balance.
C. A firm should decrease its cash holdings as long as the net present value (NPV) of doing so is negative.
D. Effective cash management results in minimization of the total interest earnings involved with holding cash.

Correct Answer: A