Select TRUE if the statement is correct and FALSE if incorrect. 1. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes fixed amount of cash through out the operating cycle. * 2. A company buys marketable securities when the cash outflows exceed the cash inflows. * 3. There is no cost in holding large amounts of cash for business operations. *
Select TRUE if the statement is correct and FALSE if incorrect.
1. Miller Orr Model is a tool to determine the exact amount of cash needed by the business and it assumes fixed amount of cash through out the operating cycle. *
2. A company buys marketable securities when the
3. There is no cost in holding large amounts of cash for business operations. *
4. Cash flows are always certain in whatever type of industry the business belongs to. *
5. Baumol Model incorporates the variability of cash flows depending on the seasonality of need. *
6. The longer the operating cycle of a business, the more a business needs cash for its operations. *
7. Any excess of cash beyond the upper limit will be used for investment in marketable securities. *
8. The lower the amount of cash needed, the lower the transaction cost. *
9. Holding more cash means having a higher opportunity cost associated with cash holdings. *
10. Marketable securities are long term investments in
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