In the Miller-Orr model, _____________, the greater will be the difference between the target cash balance and the minimum cash balance.

Question

Quizplus · Accepted Answer

In the Miller-Orr model, the target cash balance is influenced by the opportunity cost of holding cash. A lower opportunity cost means that it is less costly to hold cash, leading to a larger difference between the target cash balance and the minimum cash balance.

In the Miller-Orr Model, _____________, the Greater Will Be the Difference