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Baumol model

Former userFormer user10y ago

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John MoffatJohn MoffatTutor10y ago#1
If you have higher balances in the current account then you need to sell investments less often and will therefore have lower transaction costs over the year. Conversely, if you keep low balances in the current account then you need to sell investments more often which means more transaction costs over the year (which is what the statement is saying).
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