The Snow Hut Has Analyzed the Carrying and Shortage Costs

question 15

Multiple Choice

The Snow Hut has analyzed the carrying and shortage costs associated with its cash holdings and determined that the firm should ideally maintain a cash balance of $3,600.This $3,600 represents which one of the following to the firm?

• A)target cash balance
• B)concentration balance
• C)available balance
• D)selected cash amount
• E)compensating balance

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Definitions:

Standard Normal Random Variable

A normal distribution with a mean of 0 and a standard deviation of 1, used as a basis for comparison in statistics.

z

In statistics, often refers to a z-score, which measures the number of standard deviations a data point is from the mean of a distribution.

Standard Normal Random Variable

A random variable with a mean of zero and a standard deviation of one, following a normal distribution.

Probability

A numeric scale between 0 and 1 that quantifies how likely an event is to take place.