The target cash balance is set optimally such that it need not be adjusted for seasonal patterns and unanticipated fluctuations although it is changed to reflect long-term changes in the firm's operations.

Question

Quizplus · Accepted Answer

The target cash balance should be adjusted for seasonal patterns and unanticipated fluctuations to ensure liquidity, even if it is primarily set for long-term operational changes.

The Target Cash Balance Is Set Optimally Such That It