General Studies · Cash Management Models
Identify the incorrect statement regarding cash management models from the given options:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The Baumol model is suitable when cash transactions are steady and predictable
- 2Both Baumol and Miller-Orr models account for transaction costs of switching between cash and marketable securities
- 3In the Miller-Orr model, the upper and lower limits are set arbitrarily by management without considering cash variance✓
- 4The Miller-Orr model assumes cash flows are stochastic and fluctuating unpredictably
Correct answer
In the Miller-Orr model, the upper and lower limits are set arbitrarily by management without considering cash variance
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