If Investors Have Two Identical Assets That Have Different Rates

question 340

True/False

If investors have two identical assets that have different rates of return, the investors will sell the
asset with the higher rate of return to buy the asset with the lower rate of return.

---

Definitions:

Velocity of Money

The rate at which money circulates or turns over in an economy in a given period of time, used as an indicator of economic activity.

Transactions Demand

The demand for money as a medium of exchange, reflecting the need for cash or liquid assets to carry out daily transactions.

Asset Demand

Holding money as a store of value instead of other assets such as stocks, bonds, savings accounts, certificates of deposit, or gold.

GDP

Stands for Gross Domestic Product, which is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.