NEW2012Money,BankingandFinancialMarkets-1精选.ppt

The Term Structure of Interest Rates Term structure of interest rates: the relationship among bonds with the same risk characteristics but different maturities. Yield Curve Any theory of the term structure of interest rates must explain three facts: Interest rates of different maturities tend to move together. Yields on short-term bonds are more volatile than yields on long-term bonds. Long-term yields tend to be higher than short-term yields. The Expectations Hypothesis The essence of the expectations hypothesis Certainty means that bonds of different maturities are perfect substit