Which of the Following Approaches for Determining the Target Cash

question 4

Multiple Choice

Which of the following approaches for determining the target cash balance assumes that the distribution of daily net cash flows is normally distributed, and allows for both cash inflows and outflows?

• A) The Baumol model
• B) The Miller-Orr model
• C) The Merton model
• D) The Interbank Financial model

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Definitions:

Banks

Financial institutions licensed to receive deposits and make loans, and they offer various other financial services.

Bureaus of Vital Statistics

Government agencies tasked with recording and maintaining essential records of births, deaths, marriages, and divorces.

Banks

Financial institutions licensed to receive deposits, offer loans, and provide various financial services to individuals and businesses.

Response Time

The amount of time it takes to react to a request, inquiry, or stimulus.