Liquidity Preference Under Uncertainty: A Model of Dynamic Investment in Illiquid Assets, November 1978 (Classic Reprint) - Hardcover

Carliss Y. Baldwin

Hardcover

ISBN 10: 0484417770 ISBN 13: 9780484417778

Publisher: Forgotten Books, 2018

Synopsis

Explore how investors decide on long-term, illiquid investments when the future is uncertain.

This study outlines a dynamic, mathematical model of choosing irreversible investments under risk. It treats liquidity as a real trade-off between potential returns and the costs of locking capital away. The framework compares a liquid, short‑term alternative to a long‑lasting, illiquid opportunity and shows how an investor’s optimum depends on horizon length, lifetimes of assets, and the distribution of机会.

• See how the concept of a liquidity premium arises and when it should be demanded.
• Learn how the remaining time to the horizon shapes optimal hurdle rates over time.
• Understand how the duration of investments and arrival patterns of opportunities affect decisions.
• Recognize the differences between the model’s theoretical hurdle rates and actual market rate structures.

Ideal for readers interested in how rational investors allocate capital to irreversible projects under uncertainty, using a formal, continuous-time decision framework.

Edition details

• Publisher: Forgotten Books
• Publication date: 2018
• Language: English
• ISBN 10: 0484417770
• ISBN 13: 9780484417778
• Binding: Hardcover
• Number of pages: 47