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Basic Question 2 of 10
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 just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
explain traditional theories of the term structure of interest rates and describe the implications of each theory for forward rates and the shape of the yield curve;
CFA® 2025 Level II Curriculum, Volume 4, Module 26.