If a Chequing Account Has an Interest Rate of 1

question 154

Multiple Choice

If a chequing account has an interest rate of 1% and a Treasury bill has an interest rate of 3%,the opportunity cost of holding cash in a chequing account is:

• A) 0%.
• B) 0.02%.
• C) 1%.
• D) 2%.

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Definitions:

Detaching

The process of emotionally or physically distancing oneself from a person, situation, or thought.

Projection

A defense mechanism in psychology where individuals attribute their own unacceptable thoughts, feelings, or motives to another person.

Reaction Formation

This defense mechanism involves the disguising of one's own threatening impulses by attributing them to others in an exaggerated or opposite form, as a means of coping with anxiety.

Exaggerated Emotions

Intensified feelings that are often disproportionate to the situation, sometimes due to stress, personality traits, or psychological conditions.