Optimal Cash Level (Miller-Orr Model) Formula

Below you will find descriptions and details for the 1 formula that is used to compute optimal levels of cash (Miller-Orr model).

Optimal cash level (Miller-Orr model):

where F is the fixed cost of a securities transaction, V is the daily cash variance, r is the daily interest rate on marketable securities, and M is the minimum cash balance.

Related Resources

Calculator References Related Calculators Search