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Definition of Rational expectations
The idea that people rationally anticipate the future and respond to what they see ahead.
The 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.
Related: pure expectations theory.
Theories of the term structure of interest rates which include the pure
Theory that expected spot exchange rate equals the forward rate.
An assumption of Markowitz portfolio construction that investors
The implied call imbedded in the MBS. Identified as irrational because the call is
A form of the pure expectations theory which suggests that the returns on bonds
Management actions taken in the effort to create stable
a formulation of the details of implementing
Also called an internally efficient market, one in which investors can obtain
A theory that asserts that the forward rates exclusively represent the expected
A variant of pure expectations theory which suggests that the return that an
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