expectations hypothesis:
the theory that states that future interest rates can be forecasted by looking at the term structure because the return on a long-term bond is essentially the average return on short-term bonds over the same period
liquidity premium:
the extra yield that must be paid to entice investors to hold long-term instead of short-term investments
market segmentation:
the theory that markets for long-term and short-term assets are distinct; only the demand of and supply for funds in these markets determines relative interest rates between short-term and long-term assets
preferred habitat:
the particular term to maturity for which an investor has a distinct preference
spread:
the difference between borrowing and lending rates; also the difference between long-term and short-term interest rates
term structure of interest rates:
the structure of interest rates on instruments that differ only by term to maturity but are otherwise the same
yield curve:
the curve of the yields to maturity of assets of different maturities; essentially, the yield curve describes the relationship between short-term and long-term interest rates
