The BAT Model:

Question

The BAT Model:

Quizplus · Accepted Answer

The BAT model is used to determine the target cash balance, which is the optimal level of cash to hold to minimize the costs of holding too much or too little cash. Option A is incorrect as the model does consider opportunity costs. Option B is incorrect as the model is not used to eliminate costs, but to minimize them. Option C is incorrect as the model assumes cash balance fluctuates based on a deterministic pattern. Option E is incorrect as the BAT model aims to maintain an optimal cash balance, not an average cash balance of zero.