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Professor Bowden is in the middle of her lecture on marital satisfaction when a student in the back interrupts her and says, "Dr Phil doesn't agree with that theory!" Soon other students chime in to add fuel to the discussion. Professor Bowden just smiles and asks the original student to produce the research that Dr Phil carried out to justify his statements. What lesson is Professor Bowden trying to teach?
Forward Rates
Interest rates or financial transaction rates agreed upon now, to be executed at a future date.
Yield Curve
A graphical representation that shows the relationship between interest rates and the maturity dates of debt securities.
Treasury Bond
A long-term, government-issued security with a fixed interest rate and maturity of more than 10 years, considered to be one of the safest investments.
STRIPS
Separate Trading of Registered Interest and Principal of Securities; a form of a bond that separates its interest payments from its principal repayment obligation, enabling investors to hold and trade them separately.
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