Assume short-term securities yield 5% and it costs $20 for buying and selling securities. The variance of the firm's daily net cash balances is $20,000. Management keeps at least $1,000 in cash balances. What is the maximum amount the firm will let accumulate in its cash account before investing in marketable securities? How much will the firm invest?

Answer rating: 100% (QA)

a Per the MillerOrr Model the Optimal cash return point is given by Return Point Lower Limit 13 Spre... View the full answer