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

Question

Quizplus · Accepted Answer

The Miller-Orr model assumes that the distribution of daily net cash flows is normally distributed and allows for both cash inflows and outflows. It provides a method to determine the target cash balance by setting upper and lower limits on cash balances, adjusting the cash balance within these limits as necessary.

Which of the Following Approaches for Determining the Target Cash