Assume There Are Just Two Assets, Money and Bonds

question 19

Multiple Choice

Assume there are just two assets, money and bonds. We can expect that an individual with a given level of wealth will

• A)not hold money as long as bonds pay a positive rate of interest.
• B)hold more money when the current interest rate is very low.
• C)hold lots of money even at very high interest rates.
• D)hold less money when the current interest rate is very low.
• E)hold less money when bond prices rise.

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Definitions:

Owner's Capital

The amount of equity a business owner has in the firm, representing the owner's personal investment plus any profits retained in the business.

Internal Control

Practices and procedures deployed by a company to verify the honesty of its financial and accounting figures, enhance responsibility, and eliminate swindling.

Inventoriable Costs

Direct costs associated with the acquisition or production of goods that are held for sale in the ordinary course of business.

Closing Entries

Closing entries are journaled at the end of an accounting period to transfer the balances in temporary accounts to permanent accounts, thereby resetting the temporary accounts for the next period.