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Hello Tutor,I have a question about the interest cost using in the Baumol model,
in BPP study text pg 130 ,the solution for 4.1.1 example
the cost of holding cash is 12%-9%=3%?Can I know why?Thank you.But I explain why in my free lectures on the Baumol model !! You cannot expect me to type out all of my lectures here if you are not bothering to watch them 🙂
I do not have the BPP Study Text – only the Revision Kit. I assume that 12% is the return on their investments and the 3% is the interest earned on short-term deposits.
If you watch the lectures then you do not need to use the Study Text – the lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well. Most important is that you have bought a Revision Kit because that is full of past exam questions (and other exam standard questions).
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