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

Rejection of null hypothesis - testing of hypothesis, Two researchers test ...

Two researchers test the same hypothesis. Researcher A rejects the null hypothesis and researcher B fails to reject the null hypothesis.  Discuss three reasons that could cause the

Define why equipment show up on a profit and loss statement, Define why Equ...

Define why Equipment show up on a profit and loss statement? The buy of devices that will be used in a business is not revealed on the revenue and reduction declaration. Howeve

LINEAR REGRESSION, Y=C+1075x,when x was 2, and y was 239, given that y inte...

Y=C+1075x,when x was 2, and y was 239, given that y intercept was 11. calculate the residual.

How does an amplifier work, Expertsmind.com  brings you unique solution in ...

Expertsmind.com  brings you unique solution in  physics An audio amplifier setup will have a power amplifier and usually a preamplifier.  The preamplifier takes the wea

Estimate the parameters of the normal distribution, The sizes of 15 Califor...

The sizes of 15 California earthquakes are given below. 6.8   6.6  7.5  6.2  6.5  7.1  8.3  5.9  6.1  6.9  7.0  6.2  5.9  6.3  7.3 (a)  Assuming normal distribution for the s

Website needed, Where can I find statistics on how goal setting can help el...

Where can I find statistics on how goal setting can help elementary students?

Allocation surrounding to accounts, Allocation surrounding to accounts An a...

Allocation surrounding to accounts An aspect of a lump-sum appropriation that is specific for expenses by particular government models and/or for particular requirements, actions,

National demand, The national demand and price for a certain type of energy...

The national demand and price for a certain type of energy-efficient exhaust fan are related by p=441-3/7q, where p is the price and q the demand. The price and supply of the exhau

Galvanometer to voltameter, a millemeter ammeter of resistance 5m amp is to...

a millemeter ammeter of resistance 5m amp is to be used to measure a potential difference of 50volt.calculate the multiplier resistance

Statistics in plural and singular form, how to deffine statistics in plura...

how to deffine statistics in plural and singilar form

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