The spread structure consisting of spot price, near-month price and far-month price is called term structure. The two most common term structures are futures premium structure and spot premium structure (referred to as reverse structure). Under the futures premium structure, the spot price is lower than the futures price, and the contract price in the recent month is lower than that in the far month, forming a structure of near low and far high; Under the back structure, the spot price is higher than the futures price, and the contract price in recent months is higher than that in far months, forming a structure of near high and far low.
1. Term structure of interest rate refers to the relationship between the yield and term of funds with different terms at a certain point in time. By analyzing the term structure of interest rate, we can understand the relationship between supply and demand of funds in different terms and the overall level and changing direction of market interest rate, which is of great significance to bond investors and relevant government departments to strengthen bond management.
2. Expectation theory, also known as "unbiased expectation theory", holds that the term structure of interest rates depends entirely on the market's expectation of future interest rates. If the interest rate is expected to rise in the future, the term structure of interest rate will show an upward trend; If the interest rate is expected to decline in the future, the term structure of interest rate will show a downward trend. Expectation theory can explain the fact that the interest rates of bonds with different maturities tend to change in the same direction as time goes on; If the short-term interest rate is low, the yield curve tends to tilt upward, and if the short-term interest rate is high, the yield curve is usually reversed. But the expectation theory has a fatal flaw, which can't explain why the yield curve is usually inclined upward.
3. The key assumption of market segmentation theory is that bonds with different maturities cannot be substituted for each other at all. According to this theory, investors and bond issuers cannot freely transfer funds between securities with different maturities due to restrictions of laws, preferences or other factors. Therefore, the securities market is not a unified and undifferentiated market, but there are short-term market, medium-term market and long-term market respectively.