Harmony Corporation Has a Variance of Daily Cash Flow of €8.The

question 25

Essay

Harmony Corporation has a variance of daily cash flow of €8.The daily interest rate is .021% (.00021).Harmony desires a minimum cash balance of €80.The fixed cost of a security transaction is €2.00.Using the Miller-Orr model,calculate Harmony's target cash balance,the upper limit on cash balances,and the average daily cash balance.Explain how this is used to manage cash.

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Definitions:

Vertical Merger

A merger between companies in the same industry but at different stages of the production process, such as a manufacturer merging with a supplier.

Horizontal Merger

A business consolidation that occurs between firms operating in the same industry.

Conglomerate Merger

A merger between companies operating in different industries, aimed at diversification or expansion of a corporate portfolio.

Vertical Merger

The combination of two or more companies involved in different stages of the production process of the same good or service.