Re: moore on term structure

[Basil Moore <bmoore@xxxxxxxxxxxx>]

Bill
If we are talking solely about the maturity yield curve, I think this
relates solely to governments, for which the credit risk can be assumed to
be zero irrespective of the maturity.

If it is applied to corporates, credit risk would be an additional reason
why the normal yield curve would slope upwards.
Basil Moore





 10:51 PM 10/7/97 GMT, you wrote:
>On Tue, 07 Oct 1997 Basil Moore wrote:
>
>><snip>
>>For all these reasons i am partial to Per's story, that all asset prices
>>most importantly depend on expectations of changes in future prices in the
>>SR, since LT expectations must be so weakly held. Who could hazard a guess
>>on the value of the ST rate 30 or more years out???
>------------
>I think that credit risk also plays a part in the term structure.
>The risk premium would obviously be greater the longer the term.
>
>William F. Hummel
>
>


Basil Moore, Department of Economics
Wesleyan University
685-2363