Consider Scenario 1 Below

question 56

Multiple Choice

Consider Scenario 1 below:
Scenario 1
Consider two money management strategies. The first strategy is called the cash strategy in which an individual deposits her monthly earnings in a checking account and draws down equal amounts each day to finance her daily expenditures. Assume that she earns no interest on her checking accounts and funds are exhausted at the end of the month. The second strategy is called the bond fund strategy. Here the individual deposits one-quarter of her earnings in a checking account and the remaining three-quarters in a bond fund. The bond fund pays 1% interest per month. At the end of the week when the money in the checking account is exhausted, the individual replenishes it by withdrawing another one-quarter of her earnings from the bond fund for the next week. This process is repeated at the end of the second week and third week until the bond fund is exhausted.
An individual is more likely to adopt the bond fund strategy when

• A) the inflation rate falls.
• B) the interest rate is higher.
• C) the cost of transferring funds between interest earning assets and checkable deposits is high.
• D) bond funds become less liquid.

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Definitions:

Thomas-Kilman Conflict Model

The Thomas-Kilman Conflict Model is a framework for understanding different conflict handling styles, including competing, collaborating, compromising, avoiding, and accommodating.

Accommodating Style

A conflict resolution approach where one party makes concessions to allow the other party to satisfy their concerns.

Cooperative

An organization or venture created and operated by a group of users for their mutual benefit, often emphasizing shared goals and democracy.

Conflict Cases

Instances or situations where there are disagreements, disputes, or clashes between parties, often requiring resolution.