- CFA Exams
- CFA Level I Exam
- Study Session 12. Fixed Income (1)
- Reading 32. The Term Structure and Interest Rate Dynamics
- Subject 5. Traditional Theories of the Term Structure of Interest Rates
CFA Practice Question
The concepts of spot and forward rates are most closely associated with which one of the following explanations of the term structure of interest rates?
A. Expectations hypothesis
B. Liquidity premium theory
C. Preferred habitat hypothesis
Explanation: Forward rates exclusively represent expected future rates according to the theory.
User Contributed Comments 1
| User | Comment |
|---|---|
| belebala | Market segmentation is based on Maturity. |