Liquidity Preference Theory

Liquidity Preference Theory,

Liquidity Preference Theory Meanings:

  • Liquidity Preference Theory is a model that suggests that investors should charge higher interest rates or premiums on long-term securities that offer higher risk, as all other investor money on equity terms or other of higher liquidity. Prefer assets.

    • Liquidity preference theory refers to the demand for money as measured by liquidity.
    • John Maynard Keynes mentions this concept in his book The General Theory of Employment, Interest and Money (1936) and discusses the relationship between interest rates and supply and demand.
    • In fact, the faster an asset can be converted into cash, the more liquid it will be.

Literal Meanings of Liquidity Preference Theory

Liquidity:

Meanings of Liquidity:
  1. Cash availability for markets or companies.

Sentences of Liquidity
  1. Banks shut down, causing severe liquidity woes in small businesses

Preference:

Meanings of Preference:
  1. A better taste for an alternative than another.

  2. Previous rights or preferences, especially those related to debt repayment.

Sentences of Preference
  1. Choose the time, not the time

  2. Debt for the community must come first

Synonyms of Preference

taste, desire, liking, precedency, bias, highest place, greater importance, bent, preference, fondness, weight, partiality, predilection, weighting, inclination, precedence, pre-eminence, wish, first place, proclivity, the lead, primacy, penchant, predisposition, leaning

Theory:

Meanings of Theory:
  1. A system of options or ideas for explaining something based on basic principles, regardless of how it is explained.

Sentences of Theory
  1. Darwin's theory of evolution

Synonyms of Theory

postulate, surmise, thesis, presumption, speculation, notion, assumption, feeling, postulation, guess, suspicion, supposition, proposition, hunch, hypothesis, presupposition, conjecture, premise