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Q. Explain about Baumol Model?
Baumol Model: - Baumol model is a mechanism of cash management which is used to determine optimum cash balance. Optimum cash balance is resolute by establishing a balance between liquidity and profitability.
Higher liquidity or else higher cash balance signifies excessive cash is kept in business which results in loss of interest which can be earned by investing this excessive cash in marketable securities. In contrast lower liquidity or a very low cash balance means no idle cash as well as interest is being earned by investing the excess cash into securities. However in this case also additional costs are incurred such as brokerage of converting securities into, accounting costs of securities, cash, cost of registration of securities etc.
Net Present Value (NPV) In corporate finance, the current value (the value of cash to be received in the future expressed in today's dollars) of an investment in excess of the
Segment Margin This is the amount in which a business segment in a company contributes toward the common or indirect cost of the company. Therefore, it represents that segment'
Q. Advantages of Trade Credit? i) Easy Availability: Unlike other sources of finance, trade credit is relatively easy to obtain. Except in the case of financially very unsou
Balance Sheet: The balance sheet measures the financial position of the business at a particular point in time. It is also called Statement of Financial Position. The balan
Discuss the benefits and drawbacks of maintaining multiple manufacturing sites like a hedge against exchange rate exposure. Answer: To set up multiple manufacturing sites can
London Interbank Offered Rate (LIBOR) This is the base lending rate which is charged by banks in the London Eurocurrency market. LIBOR is the European equivalent of the U.S. pr
What is the primary advantage to a corporation of investing some of its funds in working capital? By investing in working capital a firm acquires the liquidity it needs helpin
Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be l
An issue with a put provision included in the agreement grants the bondholder the right to sell bonds back to the issuer at a pre-specified rate
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