The characteristic of an asset whereby it can be sold at any time in a relatively short period of time with a minimum loss of value. The mathematical relationship between the yields and the times to maturity on the debt securities of the same issuer as specified on the same date and denominated in the same currency. This theory of interest rates argues that the slope of the yield curve reflects the future inflationary expectations of investors, all else being equal. This theory of the term structure of interest rates argues that borrowers and lenders have a preferred maturity for their activities, and the shape of an observed yield curve results from the unique interaction between the supply and demand for funds by these lenders and borrowers in the markets for short- and long-term markets. The variability in potential investment returns that results from the possibility that the investment's issuer will not meet either its interest or principal-repayment obligations or the other terms specified in the investment agreement. An implied interest rate that does not reflect an inflation risk premium. The profit that results from the appreciation in the value of an asset, calculated as the difference between a higher selling price and a lower purchase price. The potential for an investment's yield to vary due to changes in the market interest rate and the investor's opportunity cost. The return generated by an investment expressed as a percentage and calculated by dividing the investment's cash flows by its purchase price. The graphical representation of the relationship between the interest rate and the time to maturity of the debt for a specified borrower in a given currency and on a given date