An overview of expectations theory of the term structure of interest rates.
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General Recommendations for Finance Reading
--------------------------------------------------------------------------------
Fundamentals of Investments: http://amzn.to/2r9gCXC
The Intelligent Investor: http://amzn.to/2sGY6rt
A Random Walk Down Wall Street: http://amzn.to/2r9qX5N

Views: 17541
Jonathan Kalodimos, PhD

Pure expectations says the long spot rates predict future spot rates (i.e., the forward rate is an unbiased predictor of future spot rates). "Liquidity Preference" adds a RISK PREMIUM: investors in longer maturities demand compensation for maturity risk (e.g., uncertainty, greater duration/interest rate risk). "Preferred habitat" adds the technical factor of supply/demand.

Views: 32913
Bionic Turtle

Example: Suppose that a one year bullet bond has an interest rate of 3.5 percent per year and a two year bullet bond has an interest rate of 4 percent per year. Both bonds are risk free and are quoted on an annual compounding basis. What do we expect the interest rate to be on a one year bullet bond in one year?
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General Recommendations for Finance Reading
--------------------------------------------------------------------------------
Fundamentals of Investments: http://amzn.to/2r9gCXC
The Intelligent Investor: http://amzn.to/2sGY6rt
A Random Walk Down Wall Street: http://amzn.to/2r9qX5N

Views: 6233
Jonathan Kalodimos, PhD

Example: Suppose that a two year bullet bond has an interest rate of 3 percent per year and a three year bullet bond has an interest rate of 5 percent per year. Both bonds are risk free and are quoted on an annual compounding basis. What do we expect the interest rate to be on a one year bullet bond in two years?
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General Recommendations for Finance Reading
--------------------------------------------------------------------------------
Fundamentals of Investments: http://amzn.to/2r9gCXC
The Intelligent Investor: http://amzn.to/2sGY6rt
A Random Walk Down Wall Street: http://amzn.to/2r9qX5N

Views: 4504
Jonathan Kalodimos, PhD

More videos at http://facpub.stjohns.edu/~moyr/videoonyoutube.htm

Views: 24187
Ronald Moy

If you like the video please like & share the video & do subscribe to this channel for more video. Thank you for watching the video.

Views: 201
TheKnowledge By Saurabh Kumar Jain, MBA

You read about it a lot in the business pages, and it sounds super complicated. But the yield curve is dead easy to read. Especially if you've every played chutes and ladders (or, snakes and ladders in the UK). Paddy Hirsch explains.
Subscribe to our channel!
https://youtube.com/user/marketplacevideos

Views: 59445
Marketplace APM

Notes for Money, Banking, and Financial Markets
www.saseassociates.com

Views: 3116
Video Economist

Why bond prices move inversely to changes in interest rate. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Views: 540390
Khan Academy

You may have read news articles or heard somewhere that "the yield curve is flattening," but what does that mean? Find out with today's video!
Intro/Outro Music: https://www.bensound.com/royalty-free-music
Episode Music: http://freemusicarchive.org/music/Podington_Bear/
DISCLAIMER:
This channel is for education purposes only and is not affiliated with any financial institution. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.

Views: 145719
The Plain Bagel

Asset Pricing with Prof. John H. Cochrane
PART II. Module 6. Bonds
More course details: https://faculty.chicagobooth.edu/john.cochrane/teaching/asset_pricing.htm

Views: 1082
UChicago Online

Video created by Shane Musai
Source of the Question is anonymous

Views: 4406
Shane Musai

A brief introduction to the Pure Expectations Theory

Views: 17919
Friendly Finance with Chandra S. Bhatnagar

This video explain the term structure of interest rates (the yield curve). The expectations hypothesis, segmented markets hypothesis, and the liquidity premium theory are covered.
Thanks for watching!

Views: 8568
Bentley University EC391

Training on Modern Theories of Term Structure by Vamsidhar Ambatipudi

Views: 597
Vamsidhar Ambatipudi

This CFA Level I video covers concepts related to:
• Federal Reserve's Interest Rate Policy Tools
• U.S Treasury Yield Curve
• Yield Curve Shapes
• Term Structure Theories
• Treasury Spot Rates
• Yield Spreads Measures
For more updated CFA videos, Please visit www.arifirfanullah.com.

Views: 28791
IFT

What do I do? Full-time independent stock market analyst and researcher:
https://sven-carlin-research-platform.teachable.com/p/stock-market-research-platform
Check the comparative stock list table on my Stock market research platform under curriculum preview!
I am also a book author:
Modern Value Investing book:
https://amzn.to/2lvfH3t
More about me and some written reports at the Sven Carlin blog: https://svencarlin.com
Stock market for modern value investors Facebook Group:
https://www.facebook.com/groups/modernvalueinvesting/
What is the yield curve?
The yield curve is flattening in 2018 and if it inverts there will be a recession.
What to do?
In this article I am going to explain what is the yield curve, what does a flattening or steepening yield curve mean, how the yield curve affects the economy and see whether the current yield curve indicates that we are close to a 2018 recession.
What is the yield curve
The yield curve is a chart showing the yield on bonds starting with short term maturities to long term maturities. The used bond maturities are from one month to 30 years.
What the yield curve is showing is practically the cost of borrowing money over time for the U.S. government in this case.
Steepening and flattening yield curve
The yield curve can be flat or steep.
A steep yield curve is usually at the beginning of an economic expansion. Investors fear future higher inflation and demand a higher return for the long term but the central bank still keeps short term rates low. Thus, the yield steepens.
A flat yield curve shows that long term investors are willing to take an equal yield as short-term investors in order to lock in the yield for the longer term. This means they are expecting lower yields in the future. And, historically is has been the case that economic recessions follow a flat yield curve.

Views: 13839
Invest with Sven Carlin, Ph.D.

This is a supplement to my finance courses at Oregon State University.

Views: 439
Jonathan Kalodimos, PhD

This is an excerpt from the IFT Level II lecture on Fixed Income. Here we cover 'Traditional Theories of the Term Structure of Interest Rates'
For more videos, notes, practice questions, mock exams and more visit: https://www.ift.world/
Visit us on Facebook: https://www.facebook.com/Pass.with.IFT/

Views: 2065
IFT

Asset Pricing with Prof. John H. Cochrane
PART II. Module 6. Bonds
More course details: https://faculty.chicagobooth.edu/john.cochrane/teaching/asset_pricing.htm

Views: 1596
UChicago Online

An Easy Overview Of Market Segmentation Theory

Views: 7344
Christopher Hunt

This video explain how default risk, liquidity, and tax differences affect the interest rates of bonds.
Thanks for watching!

Views: 4222
Bentley University EC391

Members :: Treasury Consulting LLP Pleased to Present Video Titled - " Influences on Fixed Income Yield Curves !! ". Video would be covering all 3 factors like Markets Expectation Theory , Bond Risk Premiums , Convexity Bias.
You are most welcome to connect with us at 91-9899242978 (Handheld) , [email protected] , [email protected] , Skype ID ~ Rahul5327 , Twitter @ Rahumagan8 or our website - www.treasuryconsulting.in

Views: 955
Foreign Exchange Maverick Thinkers

Advanced yield curve calculations based on the unbiased expectations theory. Example uses Solver on Excel and the BAII calculator.

Views: 1645
David Johnk

Subject: Business Economics
Paper: Macroeconomic Analysis and Policy

Views: 392
Vidya-mitra

Views: 1091
Sapphasak Chatchawan

Liquidity Premium Theory, Unbiased Expectations Theory problem solved on Excel

Views: 1840
David Johnk

Market segmentation theory investopedia terms m market. The yield curve is therefore shaped by the factors of supply and demand at each maturity length market segmentation theory suggests that behavior short term interest rates wholly unrelated to long. Googleusercontent search. Market segmentation theory learn forex fundamental analysis. Market segmentation theory financial definition of market labor reconsidering the evidence. This supply demand segmentation of the market leads to observed slope yield curve theory ( mst ) posits that is determined by and for debt instruments different maturities. In other words, a in nutshell, market segmentation theory refers to the idea that markets for bonds of different maturity lengths have no relationship with one another definition an interest rate related stating there is essentially correlation between short term and long rates read 8000 financial investing terms nasdaq oct 25, 2012. Au a biased expectations theory that asserts the shape of yield curve is determined by supply and demand for securities within each maturity sector we argue labor market segmentation good alternative to standard views. This i was under the impression that term structure of interest rates had four theories 1expectations theory (unbiased) a labor market is seen as segmented if it 'consists various sub groups with little or no segmentation contrasts view. Term structure of interest rates market segmentation, preferred using segmentation theory to select target research online. Market segmentation theory is also known as the segmented markets. Asp url? Q webcache. Market segmentation theory is a modern pertaining to interest rates stipulating that there no necessary relationship between long and short term this states the market for different maturity bonds completely separate in segment with effect from returns on other segments targeting help you narrow down into more manageable groups so know which pursue growing your business 1 explains yield curve terms of levels demand maturities. Market segmentation theory investopedia. Generally, the using market segmentation theory to select target markets for sun protection campaignsuniversity of wollongong, [email protected] It is based on the belief that market for each segment of bond maturities largely populated by investors with a particular preference investing in securities within maturity time frame short term, intermediate term or long apr 10, 2015 segmentation theory states there no relationship between markets bonds different lengths. What is market segmentation theory? Definition and meaning theory definition nasdaq meaning, overview, factssegmentation oxford reference. The hypothesis that traders on a financial market tend to nov 7, 2016 construction firm may desire sell ten year bonds in order repay them when project is finished and there abundant liquidity meet demands of creditor. A market segmentation theory uk essayspreferred habitat labor wikipedia. Since it is sometime

Views: 1478
Your Question I

If you've been following what the Federal Reserve is doing with the interest rate, you have probably heard them talk about the yield curve. Marketplace Senior Editor Paddy Hirsch explains what the curve is and what happens if it gets flattened.
For more stories:
marketplace.org/whiteboard
Subscribe to our channel!
https://youtube.com/user/marketplacevideos

Views: 61481
Marketplace APM

Consider the following spot interest rates for maturities of one, two, three, and four years.
Year | Rate
1 | 4%
2 | 5%
3 | 6%
4 | 7%
What is the price of a four year, 4 percent coupon bond with a face value of $100? Assume the bond pays an annual coupon.
What are our expectations of the yield for a one year bond that starts in one, two, and three years, i.e., what are the forward rates?
Suppose the inflation expectations are a constant 2 percent, what are the expected real interest rates for each one year period in the future?
Suppose that immediately after purchasing the bond that market expectations of the inflation rate decrease to a constant one percent. What are our new nominal forward rates? Assume expectations of real interest rates have not changed.
In one year, what do we expect the new term structure of interest rates to be?
In one year, what do we expect the price of the bond to be based on the new term structure of interest rates?
What do we expect the holding period return to be if you sell it immediately after receiving the first year’s coupon?
Note: There is a typo in calculating the holding period return. The correct formula is (92.22 - 90.17 + 4)/90.17 = 6.7%
Note: A pdf of the solution is available from here: https://goo.gl/MeMDkv

Views: 2243
Jonathan Kalodimos, PhD

If you like the video please like & share the video & do subscribe to this channel for more video. Thank you for watching the video.

Views: 1127
TheKnowledge By Saurabh Kumar Jain, MBA

CEC/UGC: Economics, Commerce and Finance (EMRC,Gujarat University,Ahmedabad)

Views: 305
Ch-07 Economics, Commerce and Finance

Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “Yield Curve”
Shorthand for comparisons of the interest rate on government bonds of different maturity. If investors think it is riskier to buy a bond with 15 years until it matures than a bond with five years of life, they will demand a higher interest rate or yield on the longer-dated bond. If so, the yield curve will slope upwards from left the shorter maturities to right. It is normal for the yield curve to be positive upward sloping, left to right simply because investors normally demand compensation for the added risk of holding longer-term securities. Historically, a downward-sloping or inverted yield curve has been an indicator of recession on the horizon, or, at least, that investors expect the central bank to cut short-term interest rates in the near future. A flat yield curve means that investors are indifferent to maturity risk, but this is unusual. When the yield curve as a whole move higher, it means that investors are more worried that inflation will rise for the foreseeable future and therefore that higher interest rates will be needed. When the whole curve moves lower, it means that investors have a rosier inflationary outlook.
Even if the direction of a yield curve is unchanged, useful information can be gleaned from changes in the spreads between yields on bonds of different maturities and on different sorts of bonds with the same maturity such as government bonds versus corporate bonds, or thinly traded bonds versus highly liquid bonds.
By Barry Norman, Investors Trading Academy - ITA

Views: 4829
Investor Trading Academy

Annual Interest Varying with Debt Maturity. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/corp-bankruptcy-tutorial/v/chapter-7-bankruptcy-liquidation?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/annual-interest-varying-with-debt-maturity?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Views: 145242
Khan Academy

Training on Traditional Theories of Term Structure of Interest rates by Vamsidhar Ambatipudi

Views: 340
Vamsidhar Ambatipudi

http://www.tutorialoutlet.com/all-miscellaneous/busn-602-the-unbiased-expectations-theory-of-the-term-structure-of-interest-rates-holds-what-is-the-1-year-interest-rate-expected-one-year-from-now/
FOR MORE CLASSES VISIT
tutorialoutletdotcom
• Suppose we observe the following rates: 1R1 = 9%, 1R2 = 11%. If the unbiased expectations theory of
the term structure of interest rates holds, what is the 1-year interest rate expected one year from now,
E(2r1)? (Do not round intermediate calculations and round your answer to the nearest whole
percent.)
% Interest rate 2-) You note the following yield curve in The Wall Street Journal. According to the unbiased expectations
theory, what is the 1-year forward rate for the period beginning one year from today, 2f1? (Round your
answer to 2 decimal places.)
Maturity
One day
One year
Two years
Three years Yield

Views: 162
Featherstone Littlewood754329816

Financial Theory (ECON 251)
According to the rational expectations hypothesis, traders know the probabilities of future events, and value uncertain future payoffs by discounting their expected value at the riskless rate of interest. Under this hypothesis the best predictor of a firm's valuation in the future is its stock price today. In one famous test of this hypothesis, it was found that detailed weather forecasts could not be used to improve on contemporaneous orange prices as a predictor of future orange prices, but that orange prices could improve contemporaneous weather forecasts. Under the rational expectations hypothesis you can infer more about the odds of corporate or sovereign bonds defaulting by looking at their prices than by reading about the financial condition of their issuers.
00:00 - Chapter 1. The Rational Expectations Hypothesis
12:18 - Chapter 2. Dependence on Prices in a Certain World
24:42 - Chapter 3. Implications of Uncertain Discount Rates and Hyperbolic Discounting
46:53 - Chapter 4. Uncertainties of Default
On the other hand, when discount rates rather than payoffs are uncertain, today's one year rate grossly overestimates the long run annualized rate. If today's one year interest rate is 4%, and if the one year interest rate follows a geometric random walk, then the value today of one dollar in T years is described in the long run by the hyperbolic function 1/ √T, which is much larger than the exponential function 1/(1.04)T, no matter what the constant K. Hyperbolic discounting is the term used to describe the tendency of animals and humans to value the distant future much more than would be implied by (exponentially) discounting at a constant rate such as 4%. Hyperbolic discounting can justify expenses taken today to improve the environment in 500 years that could not be justified under exponential discounting.
Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses
This course was recorded in Fall 2009.

Views: 28067
YaleCourses

Financial Markets (ECON 252)
The markets for debt, both public and private far exceed the entire stock market in value and importance. The U.S. Treasury issues debt of various maturities through auctions, which are open only to authorized buyers. Corporations issue debt with investment banks as intermediaries. The interest rates are not set by the Treasury, the corporations or the investment bankers, but are determined by the market, reflecting economic forces about which there are a number of theories. The real and nominal rates and the coupons of a bond determine its price in the market. The term structure, which is the plot of yield-to-maturity against time-to-maturity indicates the value of time for points in the future. Forward rates are the future spot rates that can be calculated using today's bond prices. Finally, indexed bonds, which are indexed to inflation, offer the safest asset of all and their price reveals a fundamental economic indicator, the real interest rate.
00:00 - Chapter 1. Introduction
04:25 - Chapter 2. The Discount and Investment Rates
19:12 - Chapter 3. The Bid-Ask Spread and Murdoch's Wall Street Journal
29:17 - Chapter 4. Defining Bonds and the Pricing Formula
39:38 - Chapter 5. Derivation of the Term Structure of Interest Rates
52:34 - Chapter 6. Lord John Hicks's Forward Rates: Derivation and Calculations
01:06:09 - Chapter 7. Inflation and Interest Rates
Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses
This course was recorded in Spring 2008.

Views: 50919
YaleCourses

The theoretical spot rate curve is different than the par yield curve. Here is how to bootstrap the spot rate. For more financial risk videos, visit our website! http://www.bionicturtle.com

Views: 87588
Bionic Turtle

A simple comparison using a 2.5 year $100 par 6% semiannual coupon bond. Spot rate: the yield for each cash flow that treats the cash flow as a zero-coupon bond. A coupon-paying bond is a set of zero-coupon bonds. Forward rate: the implied forward rates that make an investor indifferent to rolling over versus investing at spot.
Yield to maturity (YTM, an IRR): the single rate that can be used to discount all of the bond's cash flows, in order to price the bond correctly. So the YTM is a flat horizontal line. For more financial risk videos, visit our website! http://www.bionicturtle.com

Views: 48873
Bionic Turtle

Fiscal Policy - Bonds and Yield Curves - An understanding of why bonds and yield curves are important for an economy and for a government when enacting fiscal policy

Views: 12288
EconplusDal

Hump shaped yield curve and liquidity premium theory

Views: 2676
Rob Munger

In this video clip I explain the demand for money in terms of the liquidity preference theory of Keynes.

Views: 47652
lostmy1

In this lecture we describe the inverted yield curve and how it differs from the normal yield curve.
Before we get to that, we explain the strategy of 'riding the yield curve' and then why the inverted yield curve is such a dangerous thing when riding the yield curve.
We explain why the inverted yield curve usually occurs, and why this makes it a good leading economic indicator for predicting near-term recessions.
Along the way, we also introduce Zero-Coupon bonds, which are bonds with a single principal maturity payment without any intervening coupon-interest payments.
Previous lecture: http://www.youtube.com/watch?v=j1Fq_1pg7xE
Next lecture: http://www.youtube.com/watch?v=BW4J2HAd4VI
For financial education from London to Singapore and beyond, please contact MithrilMoney via the following website:
http://mithrilmoney.com/
This MithrilMoney lecture was delivered by Andy Duncan, CQF.
Please read our disclaimer:
http://mithrilmoney.com/disclaimer/

Views: 29061
MithrilMoney