Pure expectations says the long spot rates predict future spot rates (i.e., the forward rate is an unbiased predictor of future spot rates). “Liquidity Preference” adds a RISK PREMIUM: investors in longer maturities demand compensation for maturity risk (e.g., uncertainty, greater duration/interest rate risk). “Preferred habitat” adds the technical factor of supply/demand.
- The Federal Reserve Versus Common Sense
- Bill Cosby – Himself [napisy PL]