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    Miller-Orr Model

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    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


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

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    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