Alexa Keeps $500 Readily Accessible in Her Checking Account So

question 24

Multiple Choice

Alexa keeps $500 readily accessible in her checking account so that she can take advantage of changes in the prices of other financial assets. This illustrates the

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

---

Definitions:

Investment Opportunity

A financial or economic chance to invest capital with the expectation of achieving a profitable return.

Risk Averse

Condition of preferring a certain income to a risky income with the same expected value.

Expected Benefit

The anticipated or forecasted gain or advantage that arises from a specific action or decision, often considered in cost-benefit analysis.

Subjective Probabilities

Individual assessments or beliefs about the likelihood of future events, based on personal judgment rather than objective data.