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Why Is the Classical Model of Decision Making Categorized as Normative

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Why is the classical model of decision making categorized as normative?


Definitions:

Yield

The annual percentage yield received from an investment, including interest or dividends, relative to the cost of that investment.

Rate Anticipation Swap

A switch made between bonds of different durations in response to forecasts of interest rates.

Portfolio Duration

A measure of the sensitivity of a portfolio's value to changes in interest rates, often used for managing the interest rate risk.

Interest Rates

The expense associated with obtaining a loan, or the incentive for depositing funds, usually shown as a percentage of the original amount.

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