The Opportunity Cost of Holding Currency Decreases When

question 14

Multiple Choice

The opportunity cost of holding currency decreases when

• A)income decreases.
• B)the interest rate on bonds decreases.
• C)the interest rate on money decreases.
• D)wealth decreases.

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Definitions:

Conversion Premium

The additional cost above the market value of the underlying asset that an investor pays to own a convertible security, such as convertible bonds.

Convertible Bond

A financial instrument that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Par Value

This term denotes the officially stated value of a share of stock or bond, serving as a legal capital threshold that companies cannot issue stock below.

Current Market Value

The amount of money that could currently be received for selling an asset in the marketplace.