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Unformatted text preview: Bond Market Equilibrium Interest Rates Market for Money: LPF Equilibrium Interest Rates in LPF 5. INFORMATION COSTS the cost to overcome informational
asymmetries 4. LIQUIDITY the ease and speed with which an asset can be
turned into cash relative to alternative assets 3. RISK the degree of uncertainty associated with the return on
one asset relative to alternative assets 2. EXPECTED RETURN the return expected over the next
period on one asset relative to alternative assets 1. WEALTH the total resources owned by the individual,
including all assets Factors that inﬂuence portfolio choice: The Theory of Asset Demand Asset Demand ...
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