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Reasons or motives for holding money

Answer Text:
REASONS (MOTIVES) FOR HOLDING MONEY:
1. Transaction Motive: Money is held with a motive of meeting daily expenses for both the firms and individuals.
The transaction motive can further be divided to;
- Income motive i.e. holding money to spend on personal/ family needs.
-Business motive i.e. holding money to meet business recurring needs such as paying wages, postage, raw materials. Etc
2. Precautionary Motive: Money is held in order to be used during emergencies such as sicknesses or to meet unforeseen expenditure.
3. Speculative Motive: Money is held to be used in acquiring those assets whose values are prone to fluctuations such as shares/ money is held anticipating fall in prices of goods and services.