The shape of the treasury yield curve throughout three year benchmark and to analyze the term structure theory which supports the shape of U.S treasury yield drawn. Introduction: The liquidity preference theory is a model which tells that an investor should demand higher interest rate or premium on securities. In this these securities have long term maturity with greater risk because all factors are equal. In the liquidity preference theory investor usually prefer cash as liquidity.

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Chapter 15, Problem 8CP

Summary Introduction

To describe: The shape of the treasury yield curve throughout three year benchmark and to analyze the term structure theory which supports the shape of U.S treasury yield drawn.

Introduction:

The liquidity preference theory is a model which tells that an investor should demand higher interest rate or premium on securities. In this these securities have long term maturity with greater risk because all factors are equal. In the liquidity preference theory investor usually prefer cash as liquidity.

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