Correct Answer: The rate of interest can not be zero.

Solution : The correct answer is The rate of interest can not be zero.

The rate of interest can never be zero due to the following factors:

• Time Value of Money : Money available today is more valuable than the same amount in the future because it can be invested or used to earn returns.
• Risk and Opportunity Cost : Lending involves risks, such as non-repayment and ties-up funds that could be used elsewhere. Interest accounts for these risks and the cost of not using the money differently.
• Inflation : Inflation erodes the purchasing power of money over time. Positive interest rates provide a real return, counteracting the effects of inflation and making investments and savings worthwhile.