Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $257,000 but expects the standard deviation in net daily cash flows to be $13,200, the effective annual rate on marketable securities to be 4.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $33.50 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Optimal cash return point

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Q: Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $257,000 but…

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Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.