explain the likely preference of investors to liquidity over long term securities?
Homework Answers
Liquidity is the availability of liquid assets to a company, market or investor.
The likely preference of investors to liquidity over long term securities because Investors prefer to invest in the more liquid short term securities, To get investors to invest in long term securities, a higher return, over and above what is expected from the expectations hypothesis is required. Short term securities are typically more liquid than long term securities. Investors who prefer short term securities will hold long term securities only if compensated with a premium.
According to the liquidity preference theory, interest rates on short-term securities are lower because investors are not sacrificing liquidity for greater time frames than medium or longer-term securities.
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explain the likely preference of investors to liquidity over long term securities?
For long-term U.S. government bonds, which risk concerns investors the most? Select one: a. Liquidity risk...
For long-term U.S. government bonds, which risk concerns investors the most? Select one: a. Liquidity risk b. Interest rate risk c. Market risk d. Default risk
Which of the following investors would likely prefer a stock dividend over a cash dividend? Bayne...
Which of the following investors would likely prefer a stock dividend over a cash dividend? Bayne wants to delay paying taxes on his investments for as long as possible. Jaden values having a regular stream of income from his investments. Catrina is risk-averse and doesn't like to count on capital gains. Aila prioritizes short-term outcomes over long-term ones in her investing choices.
In your own words describe the term liquidity preference. Provide an example from your personal finances
In your own words describe the term liquidity preference. Provide an example from your personal finances
According to the liquidity premium theory of interest rates, long-term spot rates are totally unrelated to...
According to the liquidity premium theory of interest rates, long-term spot rates are totally unrelated to expectations of future short-term rates. the term structure must always be upward sloping. investors prefer certain maturities and will not normally switch out of those maturities. long-term spot rates are higher than the average of current and expected future short-term rates. investors are indifferent between different maturities if the long-term spot rates are equal to the average of current and expected future short-term rates.
A drop in interest rates: a. Affects the prices of short-term securities more than long-term securities...
A drop in interest rates: a. Affects the prices of short-term securities more than long-term securities b. Affects the prices of long-term securities more than short-term securities c. Affects the prices of both short-term securities and long-term securities the same way d. None of the above
Which of the following investors would likely prefer a cash dividend over a stock dividend? Layton...
Which of the following investors would likely prefer a cash dividend over a stock dividend? Layton prefers when companies let him decide how to benefit from his dividends. Kylie is a high-income earner and prefers to avoid additional taxes this year. Harriett is more focused on long-term outcomes than short-term ones when it comes to investing. Enrique subscribes to the "bird in the hand"theory when it comes to dividends.
- - higher interes in the long-term where My Pe Theory Market Netto They The Curve...
- - higher interes in the long-term where My Pe Theory Market Netto They The Curve Theory None of the above fequitymarkets are strong form Micient Investors should chose quity portfolios randomly Investors should put money only in professionally managed equity portfolios Investors should not invest in equity securities Investors should invest in stocks with high P raties Investors should form portfolios that are well diversified and appropriate for their own levels of risk tolerance TO To apply the Dividend...
c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturity...
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Why do long term securities have a higher return than short term securities ?
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What is the equation to solve each below? Short term solvency, or liquidity, ratios Long-term solvency,...
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- - higher interes in the long-term where My Pe Theory Market Netto They The Curve Theory None of the above fequitymarkets are strong form Micient Investors should chose quity portfolios randomly Investors should put money only in professionally managed equity portfolios Investors should not invest in equity securities Investors should invest in stocks with high P raties Investors should form portfolios that are well diversified and appropriate for their own levels of risk tolerance TO To apply the Dividend...
c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturity risk premium (MRP). Which of these premiums is included in determining the interest rate on (1) short-term U.S. Treasury securities, (2) long-term U.S. Treasury securities, (3) short-term corporate securities, and (4) long-term corporate securities? Explain how the premiums would vary over time and among the different securities listed.
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