2.2. Study the information provided below and answer the following questions. INFORMATION Croesus Enterprises is considering...

 

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2.2. Study the information provided below and answer the following questions. INFORMATION Croesus Enterprises is considering using the Miller-Orr model to manage its cash flows. The minimum cash balance would be R300 000 and the variance of its daily cash flows is R1 800 000 000 (i.e., the standard deviation is approximately R42426). The cost of buying/selling securities is R50, and the daily interest rate is 0.25%. REQUIRED: Answer the following questions: 2.2.1. Calculate the spread. 2.2.2. Calculate the Miller-Orr model upper limit and return point 2.2.3. Explain how the upper limit and return point would be used to manage the cash balances of WHG Enterprises. marks) (4 marks) (4 marks) 2.2. Study the information provided below and answer the following questions. INFORMATION Croesus Enterprises is considering using the Miller-Orr model to manage its cash flows. The minimum cash balance would be R300 000 and the variance of its daily cash flows is R1 800 000 000 (i.e., the standard deviation is approximately R42426). The cost of buying/selling securities is R50, and the daily interest rate is 0.25%. REQUIRED: Answer the following questions: 2.2.1. Calculate the spread. 2.2.2. Calculate the Miller-Orr model upper limit and return point 2.2.3. Explain how the upper limit and return point would be used to manage the cash balances of WHG Enterprises. marks) (4 marks) (4 marks)