Dictionary of Business Terms: flight to quality
flight to quality
moving capital to the safest possible investment to protect oneself from loss during an unsettling period in the market.
Dictionary of Finance and Investment Terms: flight to quality
flight to quality
moving capital to the safest possible investment to protect oneself from loss during an unsettling period in the market. For example, when a major bank fails, cautious money market investors may buy only government-backed money market securities instead of those issued by major banks. A flight to quality can be measured by the differing yields resulting from such a movement of capital. In the example just given, the yields on bank-issued money market paper will rise since there will be less demand for it, and the rates on government securities will fall, because there will be more demand for them.
