DeFusco Partners uses a rule-based model to manage its cash position. It has established a minimum cash balance of $200,000, a maximum cash balance of $800,000, and a return point of $400,000. The cash balance is currently $400,000. Whenever the daily cash balance reaches or falls outside of the control limits, DeFusco will purchase or sell marketable securities to bring the cash balance to the return point. Given the daily cash flows below (in $1,000s), calculate any needed security purchases or sales and the ending daily balance.
Day 1 2 3 4 5 6 7 8 9 10
Cash flow -50 -75 -225 300 100 0 -50 -50 -175 50
Day 11 12 13 14 15 16 17 18 19 20
Cash flow 50 450 200 50 -50 -100 -25 -25 -100 -100
Cash flow 50 450 200 50 50 100 25 25 100 100
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