Precautionary motive

Definition:

A desire to hold cash in order to be able to deal effectively with unexpected events that require cash outlay.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

"Trade me out"

Work out of one's long position (usually created by committing firm principal to complete a trade block trade) by selling stock. Antithesis of "buy them back."

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