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Liquidity premium |
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Liquidity premiumForward rate minus expected future short-term interest rate.Liquidity premium Similar MatchesLiquidity crisisLiquidity crisisA financial crisis that occurs due to lack of liquidity. In international finance, it usually means that a government of central bank runs short of international reserves needed to peg its exchange rate and/or to service its foreign loans. Liquidity preference hypothesisLiquidity preference hypothesisThe argument that greater liquidity is valuable, all else equal. Also, the theory that the forward rate exceeds expected future interest rates. Liquidity ratioLiquidity ratioSee 'acid test'. LiquidityLiquidityThe capicity to turn assets into cash, or the amount of assets in a portfolio that have that capacity. Cash itself (i.e., money) is the most liquid asset. Liquidity trapLiquidity trapA situation in which expansionary monetary policy fails to stimulate the economy. As used by Keynes (1936), this meant interest rates so low that expectations of their increase made people unwilling to hold bonds. Today it usually means a nominal interest rate so near zero that lowering it further is impossible or ineffective. Further SuggestionsLiquidity Fundliquidity Liquidity diversification Accounting liquidity |
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