The-definition.com

Definition

Liquidity premium theory

Liquidity premium theory is the theory that the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a positive term (liquidity) premium.

Share it:  Cite

More from this Section

  • Net Change
    The Net Change is the discrepancy between the current trading session's closing price ...
  • Synthetic forward
    Synthetic forward refers to complex option position which combines the purchase of a put ...
  • Standby Letter of Credit
    Standby Letter of Credit is a form of guarantee such as a demand guarantee. Used as security ...
  • Real Estate Agent
    A Real Estate Agent basically bridges the gap between buyers and sellers who want to buy ...
  • Transaction costs
    Transaction costs are the time and money spent trying to exchange financial assets, goods, ...