expectations hypothesis

noun

The proposition that a long-term interest rate is determined purely by current and future expected short-term rates, so that the expected final value of wealth from investing in a sequence of short-term bonds equals the final value of wealth from investing in long-term bonds.

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Meanings

noun
  1. economicsThe proposition that a long-term interest rate is determined purely by current and future expected short-term rates, so that the expected final value of wealth from investing in a sequence of short-term bonds equals the final value of wealth from investing in long-term bonds.
Cite this entry
APA

expectations hypothesis. (n.d.). In WatkinsX Dictionary. Retrieved November 4, 2026, from https://dictionary.watkinsx.com/word/expectations%20hypothesis

MLA

“expectations hypothesis.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/expectations%20hypothesis. Accessed November 4, 2026.

Chicago

WatkinsX Dictionary, s.v. “expectations hypothesis,” accessed November 4, 2026, https://dictionary.watkinsx.com/word/expectations%20hypothesis.

Source: expectations hypothesis on Wiktionary, CC BY-SA 4.0.