Question

briefly explain any 15 finance theories ​

Answer 1

Explanation:

Finance theory provides some specific guidance when forming forecasts of future interest rates. Nonetheless, important questions remain open. The Holy Grail of this literature is a dynamic model that is parsimonious owing to economically-motivated restrictions. The requirement of no-arbitrage is motivated by economics, but by itself it is too weak to matter. Economic restrictions with bite require, either directly or indirectly, that risk premia dynamics be tied down by economic principles. There no consensus in the literature about how this should be done. To date, no restrictions that come out of our workhorse models of asset pricing appear to be consistent with the observed behavior of Treasury bond yields.