When the rate of interest is at its maximum, which of the following will follow?

Correct option is B

The correct answer is (b) The speculative demand for money will be zero.
When interest rates are at their maximum, the speculative demand for money typically decreases to zero. This happens because high interest rates make holding bonds or other interest-bearing assets more attractive than holding cash. Investors predict that interest rates will eventually fall, leading to capital gains on bonds they purchase when rates are high. Consequently, they prefer investing in these assets rather than holding liquid cash, which does not yield returns and hence the speculative demand for money falls to zero.