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A firm needs for sure $250,000 in cash for transaction purposes over the next 2 months and this cash is currently available. Marketable securities yield

  1. A firm needs for sure $250,000 in cash for transaction purposes over the next 2 months and this cash is currently available. Marketable securities yield 6 percent and transaction costs are $50 per transaction. The firm does not carry any safety cash balances.

What is the optimal cash conversion size?

What is the total cost of holding cash balances?

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