Comparing Tobin's Model of the Speculative Demand for Money with Keynesian

question 5

Multiple Choice

Comparing Tobin's model of the speculative demand for money with Keynesian speculative demand

• A)both models imply that individuals hold only money or only bonds.
• B)the Keynesian model implies individuals diversify their asset holdings,while the Tobin model predicts that individuals hold only money or only bonds.
• C)the Tobin model implies individuals diversify their asset holdings,while the Keynesian model predicts that individuals hold only money or only bonds.
• D)both models imply that individuals diversify their asset holdings.

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Definitions:

Common Stock

Represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Undervalued

Describes a security or other type of investment that is selling for a price presumed to be less than its true intrinsic value.

Overvalued

A term describing a situation in which a security or an asset is trading at a price exceeding its intrinsic value.

Noncontrolling Interest

Noncontrolling interest, also known as minority interest, represents the portion of a subsidiary company’s equity that is not owned by the parent company.