liquidity premium

Definition

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.

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The liquidity premium was an essential thing and I thought it was great for the people investing in long term debt.

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The liquidity premium looked good on paper, so there was a sense of content and optimism when once spoke to investors about the outlook.

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The liquidity premium was substantial as all of the investors interested valued having a high liquidity portfolio over long term investments.

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liquidity preference theory liquidity premium theory