The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
Correct answer: D. speculation motive
- A. Transactions motive
- B. precautionary motive
- C. profit motive
- D. speculation motive
Explanation
The speculation motive involves choosing between money and bonds based on expected interest-rate movements. Investors hold bonds when rates are low if they expect rates to fall further, or sell them when rates rise, depending on the expected price change.
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