Term-structure theory pages explain why yield curves may slope, flatten, invert, or segment across maturities.
This subsection collects expectation, liquidity preference, segmentation, and term-premium explanations.
In this section
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Expectation Theory
Term-structure theory stating that longer-maturity yields mainly reflect expected future short-term interest rates.
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Liquidity Preference Theory
Term-structure theory arguing that longer maturities usually need extra yield because investors prefer liquidity and shorter commitments.
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Market Segmentation Theory
Term-structure theory arguing that different maturity zones are priced by separate investor demand rather than one unified expectations curve.
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Term Premium
Extra yield investors demand for holding longer maturities instead of repeatedly rolling short-term instruments.
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Unbiased Expectations Hypothesis
Hypothesis that forward rates are unbiased predictors of future short-term rates, with no systematic term-premium distortion.