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

question 294

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 Miller-Orr model, what is the optimum initial cash balance?

• A) $9,449
• B) $11,485
• C) $21,674
• D) $22,970
• E) $29,449

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Definitions:

Lookup List

A collection or database designed for easy searching and retrieval of information.

Explanation Property

A feature or aspect of an object or system that provides clarification, definition, or insight into its nature or behavior.

Validation Rule

A set of criteria that data must meet before being accepted into a database field, ensuring data integrity and accuracy.

Multivalued Field

A type of database field that can hold multiple values within a single record, contrasting with conventional fields that hold a single value.