Briefly describe one of the below three theories of the term structure of interest rates.
1. Expectations hypothesis
2. Liquidity preference theory
3. Market segmentation theory
According to these theories, what conditions would result in a downward-sloping yield curve? What conditions would result in an upward-sloping yield curve? Which theory do you think is most valid, and why?
he forums are for student interaction and submitting input after the end of the week serves no learning objectives and does not constitute as participation. Students should demonstrate their own knowledge in the forums and avoid copying and pasting from web sites. Responses will be graded directly from the Forums.
Make sure you are using credible sources in your discussions and assignments. Scholarly journals are the preferred source of credible/quality references. These consist of peer-reviewed articles published in academic journals related to the field, which are found via our Library. Websites such as Investopedia, ask.com, answers.com, or dictionary-type of websites limit the insight to the topics. Wikipedia is not acceptable as it is not a reliable or credible source of reference. The purpose is to bring in new information and how does it apply to our topic from a real-world perspective, instead of extending on definitions that are found in the book.
More information what a credible source consists of can be found here: http://writingcommons.org/evidence/supporting-sources/630-what-might-be-a-more-credible-reliable-source.
Your grade earned for your responses will be based on the Forums Grading Criteria: