What trade-off must be considered when deciding how much of your wealth is to be held as money relative to bonds?

Question

Quizplus · Accepted Answer

The trade-off to consider when deciding how much of your wealth is to be held as money relative to bonds is between the interest paid and the convenience of the asset. Bonds pay more interest but are less convenient relative to money, whereas money pays less interest and is more convenient to use. Therefore, the best choice would be to hold a combination of both money and bonds in a proportion that balances the need for liquidity and the desire for higher returns. Most investors maintain a diversified portfolio of both assets to manage their risk and return expectations.

What Trade-Off Must Be Considered When Deciding How Much of Your