1-Using the Baumol Model and comparing it to the Miller-Orr Model write an essay that examines the idea that simple models are easy to understand but lack explanatory and predictive power, whereas more complicated models gain such powers but are harder to understand.

2- Write an essay describing the likely results that ensue after a firm with excess capacity alters its credit policy. Be specific about the change, and the likely effects on sales, receivables and ultimately profits.

3- Explain how a firm with a cash deficiency uses the money markets and other short term sources of funds to survive this crisis.

Answer rating: 100% (QA)

Solution 1 it is also known as stochastic model The limitation of Baumol model i... View the full answer