Publish On: 2019-05-18
Total Post: 752
Question: What premises should necessary for Baumol’s Cash Model?
Reply On: 2013-06-22
Total Post: 8
ANS: What premises should necessary for Baumol’s Cash Model?
The Baumol’s model makes the following assumption 1. The firm is able to forecast its cash need with certainty. 2. The firm’s cash payments occur uniformly over a period of time. 3. The opportunity cost of holding cash is known and it does not change over time. 4. The firm will incur the same transaction cost whenever it converts securities to cash.
- Define precautionary motive in cash management.
- Define inter-corporate deposits.
- What is cash management?
- What premises should necessary for Baumol’s Cash Model?
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- Point out the main functions of short term cash forecasts.
- Define bank deposits.
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- Define cash investing surplus.
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