What Is the Daily Net Opportunity Cost of Holding a Cash

question 87

Multiple Choice

What is the daily net opportunity cost of holding a cash balance of $2.5 million, if the daily interest rate is 0.025% and the average transaction cost of investing money overnight is $50?

• A) $121
• B) $171
• C) $575
• D)$675

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Definitions:

Selling Price

The amount for which a good or service is sold to the customer.

Unrealized Holding Gain

The increase in value of an asset that has not been sold, hence the gain is not realized as actual profit.

Other Comprehensive Income

Income that includes all changes in equity except those resulting from investments by owners and distributions to owners.

Remaining Useful Lives

The estimated periods or units of production during which assets are expected to be productive or useful.