In regards to the Miller-Orr Model, The cash balance of the ﬁrm is permitted to ﬂuctuate within a
given range.

Question

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The Miller-Orr model allows for the cash balance of the firm to fluctuate within a given range, with upper and lower limits set by the model. When the cash balance reaches the upper limit, excess funds are invested in marketable securities, and when it reaches the lower limit, the firm must purchase securities to replenish its cash balance.

In Regards to the Miller-Orr Model, the Cash Balance of the ﬁRm