The premium required by investors investing in long-term debt. The liquidity premium explains the shape of the yield curve, since tying up cash in an investment for a longer period of time exposes the investor to more risk. The investor will demand a better return to compensate for this risk.
Related information about liquidity premium:
- Liquidity premium - Wikipedia, the free encyclopedia
Liquidity premium is a term used to explain a difference between two types of financial securities (e.g. stocks), that have all the same qualities except liquidity.
- Liquidity Premium Definition | Investopedia
A premium that investors will demand when any given security can not be easily converted into cash, and converted at the fair market value. When the liquidity ...
- Liquidity Premium - Financial Dictionary - The Free Dictionary
The rate of return that an investor expects above other rates or return in order to make an illiquid investment. All other things being equal, an investor generally ...
- What Is the Liquidity Premium? What Does It Mean? - Forbes
Feb 22, 2012 ... In the outstanding 1980s miniseries about the development of the first atomic bomb, Day One, the Hungarian physicist Leo Szilard is quoted as ...
- Liquidity premium
A liquidity premium is the extra return investors demand for holding a security that is less liquid. Liquidity premia explain a number of important aspects of ...
- An Estimate of the Liquidity Premium J. Huston McCulloch
The liquidity premium on U.S. government securities is quantitatively ... strong enough to demonstrate the existence of a liquidity premium (McCulloch 1973, pp.
- How the Liquidity Premium Varies in Good Times and Bad Times ...
Jun 17, 2011 ... The more difficult a stock is to unload, the greater the premium (or expected return) demanded for holding the stock. A recent study shows that ...
- Liquidity premium: myth or reality? - Barrie & Hibbert
The “liquidity premium” is a measure of the difference in price (or yield or ... Both the terms “liquidity premium” and “illiquidity premium” are used and this can ...