Exhibit 28.1 The Duckett Group Is Trying to Determine Its Optimal Average

question 10

Multiple Choice

Exhibit 28.1
The Duckett Group is trying to determine its optimal average cash balance. The firm has determined that it will need $5,000,000 net new cash during the coming year. The fixed transaction cost of converting securities to cash is $50, and the firm earns 10 percent on its marketable securities investments.
-Refer to Exhibit 28.1.According to the Baumol model,what is the optimal transaction size for transfers from marketable securities to cash?

• A) $7,071
• B) $38,357
• C) $70,711
• D) $102,956
• E) $87,000

---

Definitions:

Cultural Information

Knowledge related to the customs, beliefs, and practices of different societies and cultures.

Professional Behaviour

The conduct or manner that is deemed appropriate and ethical in a professional setting.

Translate

Involves the conversion of text or speech from one language to another, ensuring the original meaning, tone, and context are preserved.

Cultures

The collective patterns of behaviors, values, practices, beliefs, and norms shared by a group of people.