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6 July, 09:40

If a checking 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 checking account is: zero. 0.02%. 1%. 2%.

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  1. 6 July, 11:00
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    2%

    Explanation:

    Data provided in the question

    Interest rate on a checking account = 1%

    Interest rate on treasury bill = 3%

    So, the opportunity cost of holding cash in a checking account is

    = Interest rate on treasury bill - Interest rate on a checking account

    = 3% - 1%

    = 2%

    Simply we deduct the checking account interest rate from the treasury bill interest rate so that the opportunity cost could come
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