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

Money market

Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S.government bonds, Treasury bills and commercial paper from banks and companies.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio