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Re: Baumol's model of cash mgt
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Re: Baumol's model of cash mgt - June 28th, 2015

Equational Representations in Baumol Model of Cash Management:


Holding Cost = k(C/2)
Transaction Cost = c(T/C)
Total Cost = k(C/2) + c(T/C)

Where T is the total fund requirement, C is the cash balance, k is the opportunity cost & c is the cost per transaction.
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