If the annual market interest rate is 20%,the annual opportunity cost of having $50 cash in your pocket is

Question

Quizplus · Accepted Answer

The annual opportunity cost is the amount of money that could be earned if the cash in your pocket was invested instead of being held. Since the annual market interest rate is 20%, the annual opportunity cost of having $50 cash in your pocket is 20% of $50, which is $10. Therefore, the best choice is C, with an annual opportunity cost of $10. Option A is incorrect, since the opportunity cost is not zero. Option B is incorrect since the opportunity cost is greater than $2. Option D is incorrect since the cash in your pocket does not cause an opportunity cost of $50. Option E is incorrect since the opportunity cost is not $1000.

If the Annual Market Interest Rate Is 20%,the Annual Opportunity