The Timberline Firm Expects a Total Need of €12,500 Over

question 49

Multiple Choice

The Timberline firm expects a total need of €12,500 over the next 3 months.They have a beginning cash balance of €1,500,and cash is replenished when it hits zero.The fixed cost of selling securities to replenish cash balances is €3.50.The interest rate on marketable securities is 8% per annum.There is a constant rate of cash disbursement and no cash receipts during the month. If interest rates were to rise to 1.00% per month,what would the firm's total savings be if it switches from its current practice to the optimum practice (as given by the Baumol model) ?

• A)€4.62
• B)€7.09
• C)€26.42
• D)€28.13
• E)None of the above.

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Definitions:

Leader-member Exchange Theory

A theory that focuses on the two-way (dyadic) relationship between leaders and followers, emphasizing the mutual benefits of high-quality exchanges.

Out-group Members

Individuals who are not part of a certain group or society and may be viewed as different or outside the norm by the in-group members.

Retaliate

To take action against someone in response to their actions or wrongdoing, often with the intent to cause harm or exact revenge.

Delegating Style

A management approach where tasks and responsibilities are distributed among team members, empowering them while maintaining accountability.