Management's desired lower level of cash is needed to determine the optimal strategy using the BAT model.

Question

Quizplus · Accepted Answer

The BAT model (Baumol-Tobin model) primarily focuses on determining the optimal cash balance by balancing the trade-off between the transaction costs of converting securities to cash and the opportunity cost of holding cash. It does not specifically require management's desired lower level of cash to determine the optimal strategy.

Management's Desired Lower Level of Cash Is Needed to Determine