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The Asian Tigers Conglomerate is seeking appropriate ways to manage its cash balances The firm has established a lower limit with regard to its cash balance holdings of $40000 It faces quite a bit

The Asian Tigers Conglomerate is seeking appropriate ways to manage its cash balances. The firm has established a lower limit with regard to its cash balance holdings of $40,000. It faces quite a bit of volatility in its daily cash flows, with a variance of $300,000. The annual interest rate on marketable securities is 6%. The flxed cost per transaction of buying and selling securities is $50.
a. Calculate the target cash balance and the upper limit to holding cash for the flrm.
b. Which cash balance model did you use for your computation?
 

May 21 2020 View more View Less

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