Established in 2006 as a Community of Reality

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Neno's Place Established in 2006 as a Community of Reality


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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Term of the Day liquidity preference theory

    Lobo
    Lobo
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    Posts : 28411
    Join date : 2013-01-12

    Term of the Day liquidity preference theory Empty Term of the Day liquidity preference theory

    Post by Lobo Mon 22 Jun 2015, 8:23 pm

    Term of the Day
    liquidity preference theory
    Observation that, all else being equal, people prefer to hold on to cash (liquidity) and that they will demand a premium for investing in non-liquid assets such as bondsstocks, and real estate. The theory suggests that the premium demanded for parting with cash increases as theperiod (term) for getting the cash back increases. The rate in the increase of this premium, however, slows down with the increase in term. In the language of financial trading, this theory is expressed as "forward rates should exceed the future spot rates." This concept was first expressed by the U.K. preference hypothesis.

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