Negative liquidity premiums can also exist if long-term investors dominate the market, but the prevailing view is that a positive liquidity premium dominates, so only the anticipation of falling interest rates will cause an inverted yield curve.
12.
Negative liquidity premiums can also exist if long-term investors dominate the market, but the prevailing view is that a positive liquidity premium dominates, so only the anticipation of falling interest rates will cause an inverted yield curve.
13.
The Federal Reserve chairman said he saw signs that yield spreads and liquidity premiums among bonds of different quality were narrowing again and that it was " plausible " that they would " soon fall into more normal ranges ."
14.
The preferred habitat theory is another guide of the liquidity premium theory, and states that in addition to interest rate expectations, investors have distinct investment horizons and require a meaningful premium to buy bonds with maturities outside their " preferred " maturity, or habitat.
15.
The Liquidity Premium Theory asserts that long-term interest rates not only reflect investors'assumptions about future interest rates but also include a premium for holding long-term bonds ( investors prefer short term bonds to long term bonds ), called the term premium or the liquidity premium.
16.
The Liquidity Premium Theory asserts that long-term interest rates not only reflect investors'assumptions about future interest rates but also include a premium for holding long-term bonds ( investors prefer short term bonds to long term bonds ), called the term premium or the liquidity premium.
17.
As a result, the price of the newer bonds includes " a liquidity premium that you don't see in the off-the-runs, " said Ian MacKinnon, a senior vice president at Vanguard Group, a Valley Forge, Pennsylvania-based mutual fund company with $ 70 billion in bonds.
18.
Once a few months pass ( so the 30-year has aged to a 29?year and the 29?year has aged to a 29-year, say ), and a new 30-year is issued, the old bonds are now both off-the run and the liquidity premium will in general decrease.
