Which of the Following Helps Explain Why Depositors Sometimes Put

question 78

Multiple Choice

Which of the following helps explain why depositors sometimes put their funds in demand deposits rather than NOW accounts?

• A)Demand deposits pay interest, whereas NOW accounts do not pay interest.
• B)Businesses may not hold NOW accounts.
• C)Checks may be written against demand deposits, but not against NOW accounts.
• D)Demand deposits are more liquid than NOW accounts.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment or project.

Residual Value

The estimated value of a fixed asset at the end of its useful life, crucial for calculating depreciation.

Future Cash Inflows

Projected receipts of cash from investment, operations, or financing activities in future periods.

Market Opportunities

Areas or gaps in the market that a company can exploit to grow its business, often identified through market research.