The Liquidity Preference Theory states the rate of interest is not the reward for saving but for parting with (lending) liquidity.Critically evaluate this statement with other theories of general interest rates.

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• Capital gain: The increase in market value of a bond asset due to a fall in interest rates.
• Capital loss: The reduction in market value of a bond asset due to a rise in interest rates.
• If investors expect interest rates to rise they may sell current bond assets to avoid capital loss and hold cash until interest rates increase. The higher the interest rates the greater the opportunity cost of holding cash.
• If investors expect interest rates to fall they will hold on to bonds as they will benefit from capital gains.