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    Miller-Orr and Baumol Cash Management Models

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    Briefly compare and contrast the Baumol and Miller-Orr Cash Management Models. Given their strengths and weaknesses, which is more applicable to a small business.

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    The Baumol cash model assumes that cash is steadily consumed over time, and that business would maintain an inventory of marketable securities such as treasury bills. These would then be sold in order to maintain the cash balance. The cost of holding cash is considered to be the interest given up by not having the cash invested. Although its strength ...

    Solution Summary

    The expert examines Miller-Orr and Baumol Management Models.