XYZ's management has set the minimum cash balance to be equal to Kshs. 10, 000. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
XYZ's management has set the minimum cash balance to be equal to Kshs. 10, 000. The standard deviation of daily cash flow isKshs.2, 500 and the interest rate on marketable securities is 9 % p.a. The transaction cost for each sale or purchase of securities is Kshs.20. Calculate the: i. Target cash balance Upper limit ii. iii. iv. Average cash balance Spread (3 marks) (2 marks) (2 marks) (2 marks) XYZ's management has set the minimum cash balance to be equal to Kshs. 10, 000. The standard deviation of daily cash flow isKshs.2, 500 and the interest rate on marketable securities is 9 % p.a. The transaction cost for each sale or purchase of securities is Kshs.20. Calculate the: i. Target cash balance Upper limit ii. iii. iv. Average cash balance Spread (3 marks) (2 marks) (2 marks) (2 marks)
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided bel... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
Posted Date:
Students also viewed these finance questions
-
A company has three production departments (X, Y and Z) in its factory. After completion of all overhead allocation and apportionment, the production department budgets for the year 2016 included the...
-
The average yield on marketable securities is 9 percent/year; the fixed cost of transaction is $50 per transaction. The past cash balance study indicates that the firm's standard deviation of daily...
-
The interpretation of the upper limit rate of deviation in an attributes sampling application is a. The estimated rate of deviation in the population with probability equal to the risk of...
-
A Canadian packaging company wished to extend its activities in the area of convenience foods. It had pinpointed one particular area where it could supply pizza boxes to half a dozen chains of pizza...
-
The board of directors is considering either a stock split or a stock dividend. They understand that total stockholders equity will remain the same under either action. However, they are not sure of...
-
Prepare one-page description of the company and a one-page description of the project. In the project description, please list all the key stakeholders who will attend the project kickoff meeting....
-
A heat exchanger has been designed for use in a chemical process. A standard type of heat exchanger with a negligible scrap value costs \(\$ 4,000\) and will have a useful life of \(6 \mathrm{yr}\)....
-
Buntzell Industrial Supplies distributes industrial equipment. The company's fiscal year ends on March 31, 2017. One department in the company had 50 items that cost $540 each on hand at January 1,...
-
Drake Ltd has issued bonds that are currently priced at $1056.70. They have a $1,000 par value and 9 years to maturity. They pay a semi-annual coupon of 7%. What is the annualised yield to maturity...
-
"Part 1: The Performance Lawn Equipment database contains data needed to develop a pro forma income statement. Dealers selling PLE products all receive 18% of sales revenue for their part of doing...
-
5. On large and intense projects, how can project managers minimize the likelihood of prolonging days for a long stretch of time?
-
The second advertisement states that half the salespeople make more than $3,000 per month. Suppose there are eight salespeople. What would the eighth person need to earn for the median to be $3,000...
-
Carla Vista Company had zero units of beginning work in process. During the period, 8,640 units were completed and transferred out, and there were 560 units of ending work in process. How many units...
-
Your firm is based in southern Ireland (and thereby operates in euro, not pounds) and is considering an investment in the United States. The project involves selling widgets: you project a sales...
-
What is the best approach to use when working with clients who are addicts at a clinic to formulate a diagnosis? What factors are important to assess in the diagnostic process? How do the factors...
-
If a loan of $1750 is payed off with monthly payments of $200 with an annual interest rate of 12%, then how many payments - including a final partial payment - are needed to pay off the loan?
-
Cole England operates The Herbal Center, a marijuana dispensary, in Sacramento, California, as a sole proprietorship. The distribution of marijuana for medical purposes as well as nonmedical use by...
-
Do the three planes x + 2x + x 3 = 4, X X 3 = 1, and x + 3x = 0 have at least one common point of intersection? Explain.
-
E-Books.com currently has a 10-year $1 million bond issue outstanding (5 years remaining to maturity) with an 11% coupon interest rate and a $1,000 par value. The call premium on these bonds is 5%....
-
Refer back to problem 23. Suppose Big Oil starts from the financing mix in Table 13.2, and then borrows an additional $200 million from the bank. It then pays out a special $200 million dividend,...
-
Barclays Canada provides many of the exchange-traded funds listed on the TSX. Go to www.ishares.ca and explore 3 different ETFs. The list is found on the home page under "products." For each ETF,...
-
Use the Chart screen (Chart ) to generate historical prices for the S\&P 500 spot, and call and put options on the index with different expirations and expiration. Select a period in which the...
-
Use the Chart screen (Chart ) to generate historical prices of a selected stock and its call and put options with different expirations and expiration. Select a period in which the options were...
-
Prove the following boundary conditions using an arbitrage argument. In your proof, show the initial positive cash flow when the condition is violated and prove there are no liabilities at expiration...
Study smarter with the SolutionInn App