A Shortcoming of Both the BAT and the Miller-Orr Models

question 329

True/False

A shortcoming of both the BAT and the Miller-Orr models is that the cost of borrowing is likely more expensive than selling marketable securities.

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Definitions:

Probable Future Transfer

An anticipated movement of assets, liabilities, or ownership interests that is likely to occur based on current conditions or known events.

Current Liabilities

Obligations or debts a company is expected to pay within one year, often including accounts payable, short-term loans, and other similar liabilities.

Liquidity

A measure of how quickly and easily an asset or security can be converted into cash without significantly affecting its market price.

Profitability

A measure of the efficiency and effectiveness with which a company or business generates profit from its operations.