Which of the following represents a serious concern for those firms employing the Baumol model of cash management?

Question

Quizplus · Accepted Answer

The Baumol model of cash management assumes a constant rate of cash disbursements. Therefore, a volatile rate of cash disbursements would be a serious concern as it would make it difficult to accurately predict cash needs and maintain proper cash balances. Market illiquidity, high interest-rate risk, and low rates of return on Treasury bills may be concerns for cash management in general, but they are not specific to the Baumol model.

Which of the Following Represents a Serious Concern for Those