Lucky Louie Is Considering a NOW Account That Requires a $1500

question 92

Multiple Choice

Lucky Louie is considering a NOW account that requires a $1500 minimum balance and pays .5% interest. What would be the opportunity cost if Louie needs to withdraw the required minimum balance from a savings account paying 2% interest? Compute the opportunity cost for one year.

• A) $10
• B) $22.50
• C) $25
• D) $35

Differentiate between too broad and too narrow definitions by analyzing the number of differentia.

Analyze the importance of precision in language for clear communication.

Appreciate the complexity of language and the process of definition in ensuring effective communication.

Understand the progression of sensorimotor substages and their characteristics.

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Definitions:

Par

The face value or nominal value of a bond, stock, or other financial instrument, typically the amount on which interest payments or dividends are calculated.

Zero-Coupon Bond

A debt security that does not pay periodic interest, instead being sold at a discount and maturing at face value, generating profit at redemption.

Interest Payments

The cash outflows that a borrower makes to a lender as a compensation for the use of borrowed funds.

Premium Bond

A bond that is trading above its par value in the financial markets.