A firm uses the Miller-Orr model with a minimum balance of €10,a maximum of €80,and a target balance of €40.If the cash balance was to hit €10,what would the firm do?

Name: A firm uses the Miller-Orr model with a minimum balance of €10,a maximum of €80,and a target balance of €40.If the cash balance was to hit €10,what would the firm do?
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Question

Quizplus · Accepted Answer

The firm would sell €30 in marketable securities to bring the cash balance back to the target balance of €40 from the minimum balance of €10.

A Firm Uses the Miller-Orr Model with a Minimum Balance