When the interest rate is very high, newspapers and media channels are predicting that it may fall in future and hence anticipate capital gains from bond-holdings. Hence, people convert their money into bonds.

In the above statement, which motive of money is highlighted?

Speculative Motive

The correct answer is Option (2) → Speculative Motive

The speculative motive refers to the desire to hold or invest money based on expectations about future changes in interest rates or bond prices.

In the given statement:

• Interest rates are currently very high.

• People expect interest rates to fall, which would cause bond prices to rise (since bond prices and interest rates move inversely).

• To gain from this expected capital appreciation, people start converting money into bonds.

This behavior is driven by the expectation of future profit, which is exactly what the speculative motive describes.