People Have a Portfolio Demand for Money in Part Because

question 106

Multiple Choice

People have a portfolio demand for money in part because:

• A) money is part of a well-diversified financial portfolio.
• B) the return on money is often higher than other financial assets.
• C) money is needed to pay brokerage commissions.
• D) there is no cost to holding money which gives it a relatively high return.

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Definitions:

Permanent/Temporary

Describes assets or accounts within financial contexts; permanent assets or accounts are long-term and not expected to be converted into cash within a year, while temporary accounts track revenues, expenses, and dividends and are closed at the end of the fiscal year.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodical basis rather than transaction by transaction.

Net Method

An accounting practice where purchase discounts are recorded immediately by reducing the price of the goods bought, assuming the discount will be taken.

Journal Entries

The records of financial transactions in the accounting system, documented in chronological order.