Which term structure theory states that investors will not invest long term unless they have an economic incentive.
A) expectations theory
B) liquidity preference theory
C) market segmentation theory
D) preferred habitat theory

Question

Quizplus · Accepted Answer

The liquidity preference theory suggests that investors prefer short-term securities and will only choose to invest in long-term securities if they are offered a premium, or an economic incentive, to compensate for the additional risk.

Which Term Structure Theory States That Investors Will Not Invest