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Expectations hypothesis theories

Definition: [crh] Theories of the term structure of interest rates, which include the pure expectations theory; theDefinition: liquidity theory of the term structure, and the preferred habitat theory. These theories hold that each forward rate equals the expected future interest rate for the relevant period. These three theories differ, however, on whether other factors also affect <Definition: A HREF="/?rd=forward+rates">forward rates, and how.

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