Question
1.BBD has set the lower limit on its cash at $12,000. Its monthly standard deviation of net cash flows is $1,500. The interest rate earned
1.BBD has set the lower limit on its cash at $12,000. Its monthly standard deviation of net cash flows is $1,500. The interest rate earned on it investments is 3.6% per annum. Each transaction to buy or sell securities is $35.
a.How much is the target cash balance C*?
b.How much is the upper cash balance.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
