State expectations theory of term structure of interest rate, Financial Management

Assignment Help:

State the expectations theory of the term structure of interest rates.

Expectations theory:

The expectations theory of the term structure of interest rates specifies that into equilibrium, each long-term rate is a geometric average of today’s short term rate and usual short-term rates in the future.

This theory needs that there is an implicit relationship in between forward rates and current bond yields. The forward rate of interest is the rate of interest which will be payable onto funds beginning at any future date.


Related Discussions:- State expectations theory of term structure of interest rate

Need help, #queThe opening balance of one of the 31-day billing cycles for ...

#queThe opening balance of one of the 31-day billing cycles for Lorenzo''s credit card was $4100, but after 15 days Lorenzo made a payment of $2300 to decrease his balance, and it

Define in brief about cash and share exchange, Define the both cash and sha...

Define the both cash and share exchange Generally both cash and share exchange are used to make the offer more attractive. Other forms of consideration include: Paper consid

find the worst case npv and probability, Question 1 What are the tota...

Question 1 What are the total cash inflows for project A? Discount rate (%)                      NPV of A (Rs.) 0

Venture capital and private equity, It is argued that VC & PE houses achiev...

It is argued that VC & PE houses achieve superior returns through ruthlessly focussing management on short to medium term outcomes. In particular, parsimonious cash management is g

Working capital, applicablility of operating cycle of broilers[poultry] in ...

applicablility of operating cycle of broilers[poultry] in uganda

Write the format to place the order, Write the format to place the order. W...

Write the format to place the order. What are the risks involved in the delivery of products. Format of the order: ? Purchase order ? Acknowledgement form ? Material requisitio

Explain the operating profit margin - performance ratios, Operating profit ...

Operating profit margin Operating profit margin    =   (PBIT / Turnover) x 100% This is the ratio of operating profit to turnover or sales. A high operating profit margin is

What is the benefits of divestment, What is the Benefits of divestment ...

What is the Benefits of divestment ¸ Releases cash tied up to finance more promising opportunities. ¸ Reduces diversification and complexity of a group in case of a demerger

Yield curve strategies, Yield curve strategies take into account the ...

Yield curve strategies take into account the distribution of the maturities of the bonds of the portfolio in order to take advantage of the forecasted movements o

Rating methodologies of a debt instrument, The key parameters t...

The key parameters taken into account while rating a debt instrument are as follows: 1. Industry Evaluation - This involves an evaluation of the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd