Econ 121 Test 3

Econ 121 Test 3 - : the theory that a long-term interest...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Liquidity: difference in yields On-the-run security: the U.S. treasury security (for a given time to maturity) that was issued most recently in the primary market ( very liquid market) Off-the-run security: a U.S. treasury security that is not the most recently issued Basis point: one-hundredth of a percentage point Expectations theory of the term structure of interest rates
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

This note was uploaded on 05/01/2011 for the course ECON 121 taught by Professor Labadie during the Spring '10 term at GWU.

Ask a homework question - tutors are online