Yonhap Infomax NewsOct 29
South Korea’s financial regulators will expand the provision of long-term forward rate and liquidity premium data to insurers from next year, aiming to strengthen liability management and risk controls in the insurance sector.
#YonhapInfomax #FinancialSupervisoryService #InsuranceCompanies #LongTermForwardRate #LiquidityPremium #LiabilityManagement #Economics #FinancialMarkets #Banking #Securities #Bonds #StockMarket
https://en.infomaxai.com/news/articleView.html?idxno=87755
Chandra S., The IntrovertOct 12, 2019

While long term rates could be seen as an average of short term rates (pure #expectations), investors need a #premium to hold long term debt instruments (inspired by market #segmentation). This premium is a reward for holding less liquid long term instruments and is therefore called the liquidity premium. This implies that even if the yield curve is flat(tish), it will develop an upward slope once #liquidity premium is Included.
#termstructure #liquiditypremium

More at https://slicesofperception.tumblr.com/post/188287724672/liquidity-premium-theory?is_related_post=1

Liquidity Premium Theory

Earlier we saw that neither the pure expectations, nor market segmentation could offer a blanket explanation for the term structure. This is because they rigidly hold on their assertions. While the...

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