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The expectations hypothesis of the term structure of interest rates (whose graphical representation is known as the yield curve) is the proposition that the long-term rate is determined purely by current and future expected short-term rates, in such a way 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 ...
This is because, in measure theory, the value of the Lebesgue integral of X is defined via weighted averages of approximations of X which take on finitely many values. [19] Moreover, if given a random variable with finitely or countably many possible values, the Lebesgue theory of expectation is identical to the summation formulas given above.
The liquidity premium theory is an offshoot of the pure expectations theory. The liquidity premium theory asserts that long-term interest rates not only reflect investors' assumptions about future interest rates but also include a premium for holding long-term bonds (investors prefer short-term bonds to long-term bonds), called the term premium ...
Robert Hall was the first to derive the effects of rational expectations for consumption. His theory states that if Milton Friedman’s permanent income hypothesis is correct, which in short says current income should be viewed as the sum of permanent income and transitory income and that consumption depends primarily on permanent income, and if consumers have rational expectations, then any ...
In probability theory, the conditional expectation, conditional expected value, or conditional mean of a random variable is its expected value evaluated with respect to the conditional probability distribution. If the random variable can take on only a finite number of values, the "conditions" are that the variable can only take on a subset of ...
Nos. 12-3176, 12-3644 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT CHRISTOPHER HEDGES, et al., Plaintiffs-Appellees, v. BARACK OBAMA, individually and as
The proposition in probability theory known as the law of total expectation, [1] the law of iterated expectations [2] (LIE), Adam's law, [3] the tower rule, [4] and the smoothing theorem, [5] among other names, states that if is a random variable whose expected value is defined, and is any random variable on the same probability space, then
Gibbs' post, featuring images of him, his wife and son has been shared more than 220,000 times. Signed "Ranger Brian," the post goes on to pen an emotional tribute to the role, of which he called ...