Gold star co. and silver star co. both manage their cash flows according to the miller orr model. gold star's daily cash flow is controlled between $100,000 and $200,000, whereas silver star's daily cash flow is controlled between $150,000 and $300,000. the annual interest rates gold star and silver star can get are 10 percent and 9 percent, respectively, and the costs per transaction of trading securities are $2,000 and $2,500, respectively. a. what are their respective target cash balances? b. which firm's daily cash flow is more volatile?
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