| expectations hypothesis | Theory that forward interest rates are unbiased estimates of expectedfuture interest rates.
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| forward interest rate | Rate of interest for a future period that would equate the total return of a long-term bond with that of a strategy of rolling over shorter-term bonds. The forward rate is inferred from the term structure.
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| liquidity preference theory | Theory that the forward rate exceeds expected future interest rates.
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| liquidity premium | Forward rate minus expected future short interest rate.
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| on the run | Recently issued bond, selling at or near par value.
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| pure yield curve | Refers to the relationship between yield to maturity and time to maturity for zero-coupon bonds.
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| short interest rate | A one-period interest rate.
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| spot rate | The current interest rate appropriate for discounting a cash flow of some given maturity.
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| term premiums | Excess of the yields to maturity on long-term bonds over those of short-term bonds.
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| term structure of interest rates | The pattern of interest rates appropriate for discounting cash flows of variousmaturities.
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| yield curve | A graph of yield to maturity as a function of time to maturity.
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