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Miller-Orr Model

In the Miller-Orr Model, which is NOT true ______

When the cash balance falls to zero, the amount coverted from maretable securities to cash is the amount represented by the upper limit

or

When the cash balance reaches the upper limit, an amount equal to the return point minus the upper limit is converted to marketable securities

Solution Preview

In this model, the cash is supposed to wander around the return point, when cash falls to zero, we need only that much cash to return to the return point. ...

Solution Summary

The solution explains how the cash balance is calculated in the Miller-Orr model

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