The Law Dictionary

Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

EXPECTATIONS THEORY Definition & Legal Meaning

Definition & Citations:

A theory of INTEREST RATES indicating that the expectations of investors influence the TERM STRUCTURE of rates. Thus, if investors expect future rates will be higher than current rates, the YIELD CURVE will be upward sloping, and vice versa. Also known as MARKET EXPECTATIONS THEORY. See also LIQUIDITY PREFERENCE THEORY, MARKET SEGMENTATION THEORY.


This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.