| Bond reconstitution | Combining stripped Treasury securities to re-create the original cash flows of a Treasury bond.
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| Bond stripping | Selling bond cash flows (either coupon or principal payments) as stand-alone zero-coupon securities.
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| Expectations hypothesis (of interest rates) | Theory that forward interest rates are unbiased estimates of expected future 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 yield curve | Relationship between yield to maturity and time to maturity for newly-issued bonds selling at par.
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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 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 longterm 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 various maturities.
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| Yield curve | A graph of yield to maturity as a function of time to maturity.
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