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Basic Question 0 of 23
The liquidity preference theory asserts that some premiums are needed to compensate investors for added ______ they face when lending long term.
B. interest rate risk
C. credit risk
A. liquidity risk
B. interest rate risk
C. credit risk
User Contributed Comments 2
| User | Comment |
|---|---|
| davidt87 | i mean the notes also say that the theory recognises the need to compensate for the fact that long-term bonds are less liquid |
| CFAJ | I love how they are already defensive in their explanation of the answer. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data
calculate and interpret portfolio standard deviation
describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated
CFA® 2025 Level I Curriculum, Volume 2, Module 1.