Liquidity Premium Theory

Some articles on liquidity premium theory, theory, premium:

Yield Curve - Theory - Liquidity Premium Theory
... The Liquidity Premium Theory is an offshoot of the Pure Expectations Theory ... The Liquidity Premium Theory asserts that long-term interest rates not only reflect investors’ assumptions about future interest rates but also include a premium for holding long-term bonds (investors prefer short ... This premium compensates investors for the added risk of having their money tied up for a longer period, including the greater price uncertainty ...

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