assignment

CHAPTER 6

The Risk and Term Structure of Interest Rates

Assignment 2

Thursday, December 10, 2020

1- What is the difference between default risk bond and default risk-free bond, and how do you calculate the risk premium for any security?

2- The risk premium has three components or parts, list all the three and define each one of them

3- Define the term structure of interest rate theory

4- Three theories have been put to explain the term structure of interest rate in your textbook, name those three theories, and define each one of them in a small paragraph.

5- Define the pure expectation theory, what it’s main conclusion ?

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