Terms Beginning With 'l'

Liquidity Premium

  • January 22, 2020
  • Team Kalkine

A liquidity premium is a term for the additional compensation demand by investors when any given security cannot be easily transformed into money for its reasonable value in the market.

It is responsible for the upward sloping yield curve usually observed. Commonly, longer maturity bonds have more market risk, and in that cash, investors demand a liquidity premium representing

 

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