标题: Pure expectations theory [打印本页] 作者: bapswarrior 时间: 2011-7-11 17:39
Pure Expectations theory...
is the expected interest rate that would prevail in the markets in the future ( say 1 year from now)...
Means if the expected IR in the market 1 year from now for 1 year is 5%
if expected IR in the market 2 years from now from now for 1 year is 6 %
if expected IR in the market 3 years from now from now for 1 year is 7 %
and so on...
This is will give us an upward sloping Yield curve
Thanks,
Varun Darji作者: atate2007 时间: 2011-7-11 17:39 标题: Pure expectations theory
"Under the pure expectations theory , forward rates are equal to expected future spot rates"
Can someone please explain this one?作者: amqata 时间: 2011-7-11 17:39
Forward rates always look forward...to what? to an epected future spot rate.作者: nitoha 时间: 2011-7-11 17:39
Thanks VD for the explaination and thanks resolute for the memory aid.
