Term structure of interest rates Research Paper

Term structure of interest rates - Research Paper Example The tendency to slope upwards occurs when short-term rates of interest are low, and the tendency to slope downwards occurs when short-term rates of interest are high. Thirdly, in most cases, the yield curve slopes upwards (Fisher, 6). The paper shall also present a model that can be used for the pricing of bonds. The model is known as Vasicek’s Model. According to economic theory, one primary factor used to explain the differences in interest rates on various securities might be variations in their terms. That is in terms of lengths of time before maturity. The term structure of interest rates refers to the association between the terms of securities and their market rates of interest (Russell, 36). Economists usually use a diagram known as a yield curve to designate the term structure of interest rates on particular types of securities at a certain point in time. Consequently, the theory of the yield curve is used to describe the term structure of interest rates (Russell, 36). The determinants of the relationship between returns on securities and their terms of maturity have remained an issue of interest, for economists for a long time. By providing a conclusive schedule of interest rates over a period, the term structure captures the market’s speculations of future events. A description of the term structure offers a means of extracting this information and predicting how variations in the underlying variables affect the yield curve (Cox, Ingersoll, and Ross, 385). In an attempt to understand the term structure of interest rates, this paper shall explore three common theories that have long been used to explain the term structure. These theories include the Expectations Hypothesis, the Segmented Markets Theory, and the Preferred Habitat or Liquidity Premium Theory. The expectations hypothesis has several variations. However, they all place a predominant focus on holding-period returns or the expected values of future spot

The Weaknesses and impact of Education administration Essay

The Weaknesses and impact of Education administration - Essay Example As a result, there have been various policies, as well as reforms that have been advocated so as to improve education and foster economic capacity. All these efforts are an acknowledgement of the existent education disparities. However, there are still a lot that is needed to realize the potential. In some cases, education has been presented to serve a purpose that is opposite the intended one. According to CORI Justice, Education can be a powerful force in counteracting inequality and poverty but in many ways, the present education system has quite the opposite effect' (socio-Economic Review 2008). As far education disparities along the racial lines are concerns, the achievements between the native and the non-native populations is widely inferred. Indeed, it is agreeable that there have been disparities between the aboriginal and the non-aboriginal groups for quite some time. These disparities have been described as the legacy of colonialism. Colonization processes are associated w ith profound consequences on the colonized societies. Colonial legacies, which now come in the form of government policies, have seen individuals disperse from the tribal and clan inclinations. The eventuality of this has been the continuous fragmentation of the cultures belonging to the aboriginal people. There have been concerns that the fragmentation of culture and the struggle to adapt to the new way of life has been accompanied by social, as well as economic instability. As such, the disintegration of