Why Do People Hold Money (Currency and Checking Account Balances)

Why do people hold money (currency and checking account balances) , and thereby forgo earning interest or dividends from a financial investment?

A) Some money is demanded for everyday transactions like parking fees, lunch, and buying groceries.
B) Some money is demanded as a precaution against unexpected costs such as automobile repairs, speeding tickets, or temporary loss of a job.
C) Some money is demanded for speculative purchases of stocks, bonds, or collectibles in case they become available at a particularly low price.
D) All of the above are correct.

Correct Answer:

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