Using Miller-Orr Slap Shot Corporation has a fixed cost associated with buying and selling marketable securities of

Question:

Using Miller-Orr Slap Shot Corporation has a fixed cost associated with buying and selling marketable securities of $75. The interest rate is currently .021 percent per day, and the firm has estimated that the standard deviation of its daily net cash flows is $60. Management has set a lower limit of $1,200 on cash holdings. Calculate the target cash balance and upper limit using the Miller-Orr model. Describe how the system will work.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...