Answer:
the liquidity preference theory
Explanation:
The theory of liquidity preference relates to the concept that indicates that an investor will accept a lower rate of interest or yield on assets with lengthy-term maturities that come with higher volatility as stakeholders favor cash or other highly liquid resources, all other considerations being equivalent.
As per the liquidity choice principle, brief-term debt interest rate is lower as creditors do not risk liquidity with larger time periods than medium- or longer-term securities. In simple words, As per the liquidity choice principle, the brief-term debt interest rate is lower as creditors do not risk liquidity with larger time periods than medium- or larger-term securities.
