单选题

The liquidity premium can be best described as compensation to investors for the:

A、 risk of loss relative to an investment’s fair value if the investment needs to be converted to cash quickly.
B、 increased sensitivity of the market value of debt to a change in market interest rates as maturity is extended.
C、 possibility that the borrower will fail to make a promised payment at the contracted time and in the contracted amount.

【正确答案】 A

【答案解析】

A is correct. “The liquidity premium compensates investors for the risk of loss relative to an investment’s fair value if the investment needs to be converted to cash quickly.”