1. 

   deepakraomore Member

   This questions is from recent exam.
   5 year and 10 year spot rate interest is 8% and 7%. Explain the Expectation theory in accordance with these spot rates.

    

   deepakraomore, Nov 29, 2012

   #1
2. 

   Mark Mitchell Member

   These spot rates would indicate a decreasing yield curve. So see the expectations theory explanation of Figure 1 in Section 3.2 of Chapter 14.

    

   Mark Mitchell, Dec 6, 2012

   #2

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