What are factors influenced the shape of the yield curve, Financial Management

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What are number of factors that influence the shape of the yield curve?

There are some of factors which influence the shape of the yield curve as follows:

(1) Expectations theory

The expectations theory of the term structure of interest rates specifies into equilibrium.

(2) Liquidity premium theory

Liquidity premium theory asserts, which in a world of uncertainty, lenders and investors will wish to hold assets that can be converted in cash speedily.

(3) Market segmentation

The expectations of investors are regarding the future interest rates and their preferences for liquidity as the market segmentation theory.


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