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 bonds, stocks, and real estate. The theory suggests that the premium demanded for parting with cash increases as the period (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. economist John Maynard Keynes (1883-1946). also called liquidity preference hypothesis.
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The idea that investors demand a premium for securities with longer maturities, which entail greater risk, because they would prefer to hold cash, which entails ...
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Definition of 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 ...
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Liquidity Preference Theory In Keynesian Economics , the desire by investors to hold their money in liquid assets, such as checking accounts, rather than.
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The argument that greater liquidity is valuable, all else equal. Also, the theory that the forward rate exceeds expected future interest rates.
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Mar 16, 2012 ... Q27E: Demand for money (liquidity preference theory). lostmy1. Subscribe Subscribed Unsubscribe. Loading icon Loading... 298 videos ...
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This paper revisits Keynes's liquidity preference theory as it evolved from the Treatise ... case” interpretation, Keynes considered his liquidity preference theory of ...
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LIQUIDITY PREFERENCE THEORY. The cash money is called liquidity and the liking of the people for cash money is called liquidity preference. According to ...