Final answer:
The liquidity premium theory posits that investors require a higher return for holding long-term securities due to their lower liquidity and higher risk compared to short-term investments.
Step-by-step explanation:
The belief that investors require a higher return to entice them into holding long-term securities is associated with the liquidity premium theory. This theory suggests that investors are compensated for the additional risk associated with long-term investments through higher expected returns. The rationale behind this is related to liquidity, which affects how easily an asset can be bought or sold. Short-term securities are typically more liquid and thus less risky compared to long-term securities, which are considered less liquid and potentially riskier as they are more exposed to unforeseen events that can influence their value over time. Therefore, investors demand a higher return for engaging in these long-term investments.