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Assume the company has a minimum cash balance of $8,000 and variance of the daily cash flows is $4,000,000, equivalent to a standard deviation of
Assume the company has a minimum cash balance of $8,000 and variance of the daily cash flows is $4,000,000, equivalent to a standard deviation of $2,000 per day. The fee per transfer/ transaction is $50 and the interest rate is 0.025% per day. Required: Using the Miller-Orr model, Calculate the spread between the upper and lower limits. (ii) Calculate the upper limit. (iii) Calculate the return point
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