PRC-3 · Chapter 17 · Question 15 of 20
According to Keynesian Liquidity Preference theory, an investor chooses to hold physical cash instead of buying bonds because he predicts bond prices will soon crash. This is the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Speculative motive
Explanation
The speculative motive involves holding liquid cash to take advantage of future changes in the prices of financial assets or interest rates.
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