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Expectations hypothesis theories |
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Definition of Expectations hypothesis theoriesExpectations hypothesis theoriestheories of the term structure of interest rates which include the pure
Related Terms:Accelerationist HypothesisBelief that an effort to keep unemployment below its natural rate results in an accelerating inflation. Biased expectations theoriesRelated: pure expectations theory. Efficient Market HypothesisIn general the hypothesis states that all relevant information is fully and Efficient Markets HypothesisThe hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security. expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. Homogenous expectations assumptionAn assumption of Markowitz portfolio construction that investors Liquidity preference hypothesisThe argument that greater liquidity is valuable, all else equal. Also, the ![]() Local expectations theoryA form of the pure expectations theory which suggests that the returns on bonds Overreaction hypothesisThe supposition that investors overreact to unanticipated news, resulting in Permanent Income HypothesisTheory that individuals base current consumption spending on their perceived long-run average income rather than their current income. Pure expectations theoryA theory that asserts that the forward rates exclusively represent the expected Rational expectationsThe idea that people rationally anticipate the future and respond to what they see ahead. Rational ExpectationsThe best forecasts that can be made given the data available and knowledge of how the economy operates. Rational expectations implies random errors, no systematic errors. Return-to-maturity expectationsA variant of pure expectations theory which suggests that the return that an Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |