The Norris Company Is Trying to Determine Its Optimal Average

question 8

Multiple Choice

The Norris Company is trying to determine its optimal average cash balance. The firm has determined that it will need $5,000,000 net new cash during the coming year. The fixed transaction cost of converting securities to cash is
$50, and the firm earns 10 percent on its marketable securities investments.
-According to the Baumol model, what is the optimal transaction size for transfers from marketable securities to cash?

• A) $ 7,071
• B) $ 38,357
• C) $ 70,711
• D) $102,956
• E) $ 87,000

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Definitions:

Indian New Deal

Phrase that refers to the reforms implemented for Native Americans during the New Deal era. John Collier, the commissioner of the Bureau of Indian Affairs (BIA), increased the access Native Americans had to relief programs and employed more Native Americans at the BIA. He worked to pass the Indian Reorganization Act. However, the version of the act passed by Congress was a much diluted version of Collier’s original proposal and did not greatly improve the lives of Native Americans.

Forced Assimilation

The process where individuals or groups are compelled to abandon their own culture, language, or identity to conform to those of a dominating or majority culture.

Dawes Act

Law passed in 1887 meant to encourage adoption of white norms among Indians; broke up tribal holdings into small farms for Indian families, with the remainder sold to white purchasers.

Popular Front

A period during the mid-1930s when the Communist Party sought to ally itself with socialists and New Dealers in movements for social change, urging reform of the capitalist system rather than revolution.