BullsNBears, a Purveyor of fiNancial Databases, Estimates It They Disburses

question 127

Multiple Choice

BullsNBears, a purveyor of financial databases, estimates it they disburses $440,000 monthly in order to pay bills. The firm's opportunity rate is 5%. The fixed cost of transferring money is $25 per
Transfer. Based on historical data, the standard deviation of monthly cash flows is $15,000 and the
Lower cash balance limit is $20,000. For Miller-Orr model questions, assume the interest rate is
0) 5% per month.
Using the BAT model, what is the opportunity cost of holding cash?

• A) $1,817
• B) $1,923
• C) $2,405
• D) $2,664
• E) $3,111

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Definitions:

Symmetric Matrix

A square matrix that is equal to its transpose, meaning its element at (i,j) is the same as the element at (j,i) for all i and j.

Work Flow

The sequence of processes through which a piece of work passes from initiation to completion, often visualized as a diagram or a series of steps.

Assignments

Tasks or pieces of work allocated to someone as part of a job or course of study.

Departmental Distances

A consideration in facility layout planning that focuses on the optimization of distances between departments to reduce costs and improve efficiency.