13 Using MillerOrr SlapShot plc has a fixed cost associated with buying and selling marketable securities of
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13 Using Miller–Orr SlapShot plc has a fixed cost associated with buying and selling marketable securities of
£100. The interest rate is currently 0.021 per cent per day, and the firm has estimated that the standard deviation of its daily net cash flows is £75. Management has set a lower limit of £1,100 on cash holdings. Calculate the target cash balance and upper limit using the Miller–Orr model, and describe how the system will work.
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