 Withdrawing money from the bank, or converting from bonds to money, incurs a fixed transaction cost equal to formula_3 per transfer (which is independent of the amount withdrawn).Let formula_4 denote the number of withdrawals made during the period and assume merely for the sake of convenience that the initial withdrawal of money also incurs this cost.Money held at the bank pays a nominal interest rate, formula_5, which is received at the end of the period.