The smallest total monthly cost , Basic Statistics

Assignment Help:

Each month, the firm Cashco has 50% chance that an amount of $ 1,000 will be credited In its current account, and a 50% chance that the account is debited $ 1,000. As current account does not pay interest, Cashco considers that for each $ 1,000 in balance current account at the end of the month, there is a cost of $ 15 (in lost interest). In the beginning of each month, Cashco can adjust the balance of the current account by making a deposit or withdrawal (for an arbitrary amount), with a cost of $ 20 per transaction. Cashco should never leave the balance becomes negative. The company is currently reviewing both following policies for the management of its liquidity:

P1: the beginning of a month when the balance is $ 3,000, immediately lower the balance to $ 1,000. At the beginning of a month when the balance is $ 0, immediately pay back $ 1000.

P2: the beginning of a month when the balance is $ 3,000, immediately lowering the balance to $ 2,000. At the beginning of a month when the balance is $ 0, immediately back the balance to $ 2,000.

Which of the two policies P1 and P2 have the smallest total monthly cost (opportunity more transactions), on average? NB The sequence of events takes place every month as shown below:

1. Observe the balance

2. Adjust the balance (if desired)

3. The balance changes randomly

4. The opportunity cost is charged.


Related Discussions:- The smallest total monthly cost

Amortized cost , Amortized cost The par value of its decision enhanced or ...

Amortized cost The par value of its decision enhanced or lowered by any unamortized top quality or lower price.

Proton-neutron hypothesis, This hypothesis was put forward by Heinsberg aft...

This hypothesis was put forward by Heinsberg after the discovery by Chadwick. According to this hypothesis, a nucleus of mass number A and atomic number Z contains Z protons, and

Rehearsal methods, A teacher is interested in comparing the effects of 3 di...

A teacher is interested in comparing the effects of 3 different parts of rehearsal methods (Rote rehearsal, Imagery, and Story) on number of words recalled. Participants are random

Tally, what is meant by tally

what is meant by tally

Transitioning from gaap to ifrs, How important do you think knowledge trans...

How important do you think knowledge transfer and training will be to help in transitioning from GAAP to IFRS? Manager 1: Knowledge transfer is going to be extremely importan

Assumed means deviations in f2 test, Assumed Means Deviations in F2 Test : ...

Assumed Means Deviations in F2 Test : When actual means of X and Y variables are in fractions the calculations can be simplified by taking the deviations from assumed means. When d

Capital assets, Capital assets Assets which meet the state''s capitalizati...

Capital assets Assets which meet the state''s capitalization strategy such as ground: developments to l&: easements: buildings: leasehold improvements: means of transportation: or

What is inference, Q. What is Inference? Ans. Inference is the pro...

Q. What is Inference? Ans. Inference is the process of deriving conclusions based on facts or premises. We often make inferences based on the results of statistical studi

Autocorrelation, at what p-value do we reject the null hypothesis for the D...

at what p-value do we reject the null hypothesis for the Dublin-Watson test

Sum, 3. In a management class of 100 students’ three languages are offered ...

3. In a management class of 100 students’ three languages are offered as an additional subject viz. Hindi, English and Kannada. There are 28 students taking Hindi, 26 taking Hindi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd