When idle cash is not invested, even for a day, in the money market the holder of excess cash balances incurs a(n):
A) Opportunity Cost
B) Excess Investment in Liquidity
C) Income Surplus
D) Increase in Clearinghouse funds
E) None of the above

Question

Quizplus · Accepted Answer

When idle cash is not invested, even for a short period, the holder misses out on potential earnings from investments, which is referred to as an opportunity cost.

When Idle Cash Is Not Invested, Even for a Day