Asked by DELINA FILLI on Jul 07, 2024
Verified
In regards to the Miller-Orr Model, the cash balance of the firm is permitted to fluctuate within a given range.
Miller-Orr Model
A financial model used to manage cash balances and optimize the level of cash holdings by setting upper and lower limits within which the balance can fluctuate before triggering a transfer of funds.
Cash Balance
The amount of cash a company has on hand, which includes currency, coins, and balances in checking and savings accounts.
- Know the workings and benefits of the BAT and Miller-Orr models in managing cash balances.
Verified Answer
OW
Oliad WeldesenbetJul 10, 2024
Final Answer :
True
Explanation :
The Miller-Orr Model allows a firm's cash balance to fluctuate within a set range, between an upper and lower limit, to manage cash flow efficiently without frequent transactions.
Learning Objectives
- Know the workings and benefits of the BAT and Miller-Orr models in managing cash balances.