Under the BAT model, an increase in the interest rate on marketable securities will cause the optimal initial balance to decline.

Name: Under the BAT model, an increase in the interest rate on marketable securities will cause the optimal initial balance to decline.
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An increase in the interest rate on marketable securities makes holding cash less attractive, leading firms to reduce their cash balances and invest more in these securities to earn higher returns.

Under the BAT Model, an Increase in the Interest Rate