Expectations theory

Expectations theory attempts to predict what short-term interest rates will be in the future based on current long-term interest rates. The theory suggests that an investor earns the same amount of interest by investing in two consecutive one-year bond investments versus investing in one two-year bond today. The theory is also known as the “unbiased expectations theory.” —Read more at Investopedia. Chen, James and Murphy, Chris B. “Expectations Theory.” 21 April 2019