According to the Liquidity Premium Theory

question 110

Multiple Choice

According to the liquidity premium theory,

• A) investors prefer longer to shorter maturities.
• B) investors prefer shorter to longer maturities.
• C) investors are indifferent between short and long maturities.
• D) investors are more interested in the tax treatment of bonds than they are in the liquidity of bonds.

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Definitions:

Statistics Classes

Statistics classes are academic courses focused on teaching the principles, methods, and applications of statistical analysis.

Relative Frequency Distribution

A representation of the number of times each value occurs relative to the total number of observations.

Cumulative Frequency

The sum of frequencies accumulated up to a certain point in a distribution, showing the number or proportion of observations below a particular value.

Cumulative Relative Frequency

The accumulation of the previous relative frequencies up to a certain class or point, representing the proportion of observations.