BOGO Shoes Would Like to Maintain Their Cash Account at a Minimum

question 131

Multiple Choice

BOGO Shoes would like to maintain their cash account at a minimum level of $100,000, but expects the standard deviation in net daily cash flows to be $7,000; the effective annual rate on marketable securities to be 6.5 percent per year; and the trading cost per sale or purchase of marketable securities to be $175 per transaction. What will be their optimal cash return point?

• A) $107,000
• B) $133,374.63
• C) $144,266.52
• D) $101,859.65

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Definitions:

Pay-per-view

A service that allows consumers to pay for and watch individual events or content, typically through a cable or satellite TV provider or online platform.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay.

Consumer Surplus

The difference between the potential total payment by consumers for a product or service and the actual total payment they make.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive.