Incurring the opportunity cost of holding cash

 

 

The Economist writes: “Cash is a safe asset, but a wasting one. The real returns on risky assets have been much greater. True, cash affords options—to buy cheaply when others are selling. But episodes of distressed selling have been fleeting, largely thanks to central banks, which have been liberal in supplying cash in emergencies.” Why are investors willing to incur the opportunity cost of holding cash in the face of current outsized returns in the equity and bond markets?

 

 

This question has been answered.

Get Answer