Liquidity preference hypothesis

Similar financial terms

Liquidity risk on bonds
The primary measure of liquidity is the size of the bid-ask spread. Liquidity risk depends on the ease with which an issue can be sold at or near its value. It follows that the wider the dealer spread, the more liquidity risk.

Accounting liquidity
The ease and quickness with which assets can be converted into cash

Liquidity premium
The amount that forward interest rates exceed expected future spot interest rates.

Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market's expectations of future interest rates because they embody a liquidity premium.

Liquidity risk
The risk that arises from the difficulty of selling an asset. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.

Liquidity ratios
Ratios that measure a firm's ability to meet its short-term financial obligations on time.

Liquidity diversification
Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor.

Liquidity
A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance. Also a market characterized by the ability to buy and sell with relative ease.

Preference stock
A security that ranks junior to preferred stock but senior to common stock in the right to receive payments from the firm; essentially junior preferred stock.

Liquidation Preference
Sometimes, usually by virtue of an agreement, certain shareholders will receive preferential treatment if a company is liquidated. Investors may insist on this so that if a company fails, they are paid out first before any other shareholders receive any payouts.

Alternative Hypothesis
The hypothesis against which the null hypothesis is tested.

Null hypothesis
In classical hypothesis testing, we take the null hypothesis as true and require the data to provide substantial evidence against it.

Overreaction hypothesis
The supposition that investors overreact to unanticipated news, resulting in exaggerated movement in stock prices followed by corrections.