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Unformatted text preview: : the theory that a long-term interest rate is equal to the average of current and expected future short-term interest rates Term premium: the difference between the interest rate on a longer-term bond and the average rate on shorter-term bonds, which arises from interest-rate risk Long-term bonds are riskier than short-term bonds...
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This note was uploaded on 05/01/2011 for the course ECON 121 taught by Professor Labadie during the Spring '10 term at GWU.
- Spring '10