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Pure expectations theory

• A theory that asserts that the forward rates exclusively represent the expected future rates. In other words, the entire term structure reflects the markets expectations of future short-term rates. For example, an increasing sloping term structure implies increasing short-term interest rates. Related: biased expectations theories

 
 Embedded terms in definition
 Biased expectations theories
Expectations
Forward rate
Forward
Future
Interest rate
Interest
Term structure
 
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