All of the Following Are Assumptions of the Baumol Model

question 30

Multiple Choice

All of the following are assumptions of the Baumol Model except:

• A)The firm uses cash at a steady,predictable rate
• B)The firm's net cash outflows occur at a steady rate
• C)The firm's cash inflows from operations occur at a steady,predictable rate
• D)The optimum cash balance the firm should hold

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Definitions:

Defective

Refers to a product, item, or component that fails to meet the quality standards or has faults, rendering it unfit for its intended purpose.

Probability

A measure of how likely it is that some event will occur; a number between 0 and 1.

Traffic Accidents

Incidents involving vehicles on public roads that result in damage, injury, or loss of life.

Poisson Distributed

A description of a distribution pattern that applies to events with a fixed interval of time or space, denoting the probability of a given number of events happening in a fixed interval.