The correct theory for explaining the yield curve

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1. Why is it unlikely that the expectations theory alone is the correct theory for explaining the yield curve?

2. Is terminal value a crucial part of the valuation estimate for a firm? Explain your yes or no answer. Also explain the challenges with estimating terminal value.

3. Explain why a mortgage-backed security becomes riskier when the values of the underlying houses decline. What, as a result, happens to the price of the mortgagebacked security?

Reference no: EM131938618

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