The Baumol model considers a net cash outflow situation only,whereas the Miller- Orr model considers a fluctuating cash- flow stream that can be either inflow or outflow.

Question

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The Baumol model is designed to determine the optimal cash balance under certainty, assuming a steady rate of cash usage (outflow), while the Miller-Orr model allows for cash flows to fluctuate unpredictably, accommodating both inflows and outflows.

The Baumol Model Considers a Net Cash Outflow Situation Only,whereas