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QUESTION
HotFoot Shoes would like to maintain its cash account at a minimum level of $35,000, but expects the standard deviation in net daily cash flows to be...
HotFoot Shoes would like to maintain its cash account at a minimum level of $35,000, but expects the standard deviation in net daily cash flows to be $5,000, the effective annual rate on marketable securities to be 7.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $300 per transaction.
What will be its optimal cash return point?
