4-Chp5-Econ3310 - Bond Market Equilibrium Interest Rates...

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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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