ranch banks must keep enough money on hand to satisfy customers' cash demands. Suppose the daily demand for cash at a branch of University Bank follows a lognormal distribution with means and standard deviation summarized as follows (in $1,000s). Monday Tuesday Wednesday Thursday Friday Saturday Sunday Мean $175 $120 $90 $60 $120 $140 $65 Std Dev $ 26 $ 18 $13 $ 9 $ 18 $21 $ 9 An armored truck delivers cash to this bank once a week. The manager of the bank can order any amount of cash she desires for this delivery. Of course, running out of cash in any week is very undesirable as customers of the bank expect to be able to withdraw their deposits on demand. Keeping excessive cash reserves would guard against this situation, However, cash is a noninterest earning asset, so there is an opportunity cost for holding excess cash reserves. a. Suppose the bank manager follows the practice of ordering enough cash to start each week with a balance of $825,000.
ranch banks must keep enough money on hand to satisfy customers' cash demands. Suppose the daily demand for cash at a branch of University Bank follows a lognormal distribution with means and standard deviation summarized as follows (in $1,000s). Monday Tuesday Wednesday Thursday Friday Saturday Sunday Мean $175 $120 $90 $60 $120 $140 $65 Std Dev $ 26 $ 18 $13 $ 9 $ 18 $21 $ 9 An armored truck delivers cash to this bank once a week. The manager of the bank can order any amount of cash she desires for this delivery. Of course, running out of cash in any week is very undesirable as customers of the bank expect to be able to withdraw their deposits on demand. Keeping excessive cash reserves would guard against this situation, However, cash is a noninterest earning asset, so there is an opportunity cost for holding excess cash reserves. a. Suppose the bank manager follows the practice of ordering enough cash to start each week with a balance of $825,000.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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(answer to question B please don’t say .134 not correct)
Branch banks must keep enough money on hand to satisfy customers' cash demands. Suppose the daily demand for cash at a branch of University Bank follows a lognormal distribution with means and standard deviation summarized as follows (in $1,000s). Monday Tuesday Wednesday Thursday Friday Saturday Sunday Мean $175 $120 $90 $60 $120 $140 $65 Std Dev $ 26 $ 18 $13 $ 9 $ 18 $21 $ 9 An armored truck delivers cash to this bank once a week. The manager of the bank can order any amount of cash she desires for this delivery. Of course, running out of cash in any week is very undesirable as customers of the bank expect to be able to withdraw their deposits on demand. Keeping excessive cash reserves would guard against this situation, However, cash is a noninterest earning asset, so there is an opportunity cost for holding excess cash reserves. a. Suppose the bank manager follows the practice of ordering enough cash to start each week with a balance of $825,000.
a.Create a spreadsheet model to track the daily cash balance throughout the week.
b. What is the probability that the bank will run out of money at some point during the week?
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