Keeping an Extra $200 in Your Checking Account to Pay

question 156

Multiple Choice

Keeping an extra $200 in your checking account to pay for possible car repairs illustrates the

• A) speculative demand for money.
• B) transfer demand for money.
• C) precautionary demand for money.
• D) transactions demand for money.

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Definitions:

Yield To Maturity

The total return expected on a bond if the bond is held until its maturity date, incorporating both interest payments and the capital gain or loss.

Discount

The reduction applied to the nominal or face value of something, typically used in the context of bonds or selling goods and services at below their listed prices.

Coupon Bond

A bond that pays the holder a fixed interest rate (the coupon) periodically until maturity, at which point the principal and final interest payment are made.

Par Value

Par value is the face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.