The Fixed Cost of a Securities Trade

question 188

Multiple Choice

The fixed cost of a securities trade:

• A) Will affect a firm with an average trade value of $10,000 less than a firm with an average trade value of $100,000.
• B) Has more bearing on the target cash balance as the number of trades increases.
• C) Is normally minimal so it can be ignored when trying to establish optimal cash balance levels.
• D) Has more impact on firms following a flexible cash policy than a firm following a restrictive cash policy.
• E) Varies with the average number of cheques processed in any stated period of time.

---

Definitions:

Stepping-Stone Method

A mathematical procedure used in transportation and logistics to find the most cost-effective way to distribute products from multiple sources to multiple destinations.

Optimal Solution

The best possible answer or strategy obtained from a selection of alternatives that maximizes or minimizes an objective function within given constraints.

Intuitive Method

A decision-making process that relies on the decision maker's instincts, feelings, or gut reactions rather than on systematic analysis.

Problem Solver

An individual or tool that identifies, analyzes, and resolves issues through logical analysis or creative thinking.