Term-structure theories and forecasts

Term-structure theories and forecasts

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Management of Financial Institutions (FIN 255)

Unit 2: Determinants of Interest Rates

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of term-structure theories and forecasts.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• Term structure of interest rates: unbiased expectation theory, liquidity preference theory, market segmentation theory
• Forecasting interest rates

Detailed Microsyllabus

1. Term-structure theories

   1. Unbiased expectations.
   2. Liquidity preference.
   3. Market segmentation.

2. Forecasting

   1. Compare implications and assumptions.
   2. Use suitable dated evidence.
   3. State uncertainty rather than present a forecast as a known future rate.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 86–88.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.