Expectations Theory
A theory proposing that long-term interest rates can act as a predictor of future short-term interest rates. Investopedia Says:
Empirical evidence suggests this hypothesis often overstates future short-term interest rates. This over-estimation may be due to the higher risk premium associated with holding a long-term debt security whose yield is more uncertain due to potential changes in interest rates. Related Terms:
Bond
Debenture
Fed Model
Federal Funds Rate
Fiscal Policy
Interest Rate
Monetary Policy
Treasury Note |