Why Would an Individual Choose to Hold Money for Speculative

question 143

Multiple Choice

Why would an individual choose to hold money for speculative purposes when the nominal return to holding money is zero?

• A) because in the long run, stocks and bonds get negative rates of return
• B) because all economies experience deflation regularly, so the real return is still positive
• C) because in the short run, stocks and bonds can have a negative rate of return
• D) because zero is the best any asset can get

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Definitions:

Forfeited Shares

Shares that are surrendered or taken back by a company from an investor because of the non-fulfillment of purchase conditions or agreements.

Reissue

The process of issuing again, such as reissuing shares or securities that have been bought back or cancelled.

Share Capital

The money that a company raises through the issue of shares, representing the capital invested by shareholders.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's earnings.