Question: BB Ltd. expects its cash flows to behave in a random manner, as assumed by the Miller and Orr Model. BB Ltd. wants you to

BB Ltd. expects its cash flows to behave in a random

BB Ltd. expects its cash flows to behave in a random manner, as assumed by the Miller and Orr Model. BB Ltd. wants you to establish the 'upper control limit' and the 'return point'. It provides the following information as requested by you: The annual yield on marketable securities is 12% The fixed cost of effecting a marketable securities transaction is Rs. 6000 . . The standard deviation of the change in daily cash balance is Rs. 12000 The management of BB Ltd. would like to maintain a minimum cash balance of Rs. 150000

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