DeFusco Partners uses a rule-based model to manage
its cash position. It has established a minimum cash balance of $200,000, a
maximum cash balance of $800,000, and a return point of $400,000. The cash
balance is currently $400,000. Whenever the daily cash balance reaches or falls
outside of the control limits, DeFusco will purchase or sell marketable
securities to bring the cash balance to the return point. Given the daily cash
flows below (in $1,000s), calculate any needed security purchases or sales and
the ending daily balance.
TUTORIAL PREVIEW
Day 1 2 3 4 5 6 7 8 9 10 Cash flow -50 -75 -225 300
100 0 -50 -50 -175 50 Day 11 12 13 14 15 16 17 18 19 20 Cash flow 50 450 200 50
-50 -100 -25 -25 -100 -100
TUTORIAL PREVIEW
|
Day
|
Cash flow (in '000s)
|
Sell securities
|
Purchase securities
|
Available cash balance
|
Cash Balance (in '000s)
|
|
0
|
400
|
||||
|
1
|
-50
|
0
|
0
|
400
|
350
|
|
2
|
-75
|
0
|
0
|
275
|
275
|
File name: DeFusco Partners.xlsx File type: . xlsx PRICE: 8
