a)Explain the three theories of cash holdings including: trade-off theory,pecking ordertheory and agency conflict theory. (30 marks) b)Based on the empirical evidence in Faulkender and Wang (2006) andDittmar and Mahrt-Smith (2007), discuss the relationship between the value of cash holdings andcorporate characteristics, including corporate leverage, cash reserves, financial constraintsand the quality of corporate governance.