Suppose You Hold $5, 000 in Cash When the Interest

question 136

True/False

Suppose you hold $5, 000 in cash when the interest rate on bonds is 4 percent.Other things equal, as the bond interest rate declines to 3 percent, you will want to hold more money because the opportunity cost of holding money has decreased.

---

Definitions:

Investment Account

A financial account held at a financial institution that holds securities, such as stocks or bonds, for investment purposes.

Goodwill Impairment

An accounting charge that companies record when the value of goodwill on the balance sheet exceeds the tested fair market value.

Reporting Units

Components of a business entity for which discrete financial information is available and is reviewed by the entity's management.

Intangible Assets

Assets that do not have physical substance but provide economic benefits to the owner, such as patents, trademarks, and goodwill.