Predictive Theories

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August 24, 2024 4 min read Definitions
Expectations Theory: Predicting Future Short-Term Interest Rates from Long-Term Rates
Finance Economics Investments Interest Rates Bond Investments Predictive Theories Yield Curve Financial Markets
Expectations Theory attempts to forecast future short-term interest rates based on current long-term interest rates, positing that the yield from consecutive short-term investments is equivalent to that from a single long-term investment over the same period.
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