Term Premium
Decomposes a long yield conceptually into expected policy-rate path and compensation for duration risk.
Formula
Variables: Long yield; expected future short rates
What it means
Decomposes a long yield conceptually into expected policy-rate path and compensation for duration risk.
Example
If a model estimates expected average short rates at 3% and the 10-year yield is 3.7%, the residual term premium is about 0.7 percentage points.
How to interpret it
This concept should be read together with its market convention, measurement horizon and underlying instrument. BondStats presents it as an analytical reference rather than investment advice; instrument documentation and primary market rules remain authoritative.
Related Formulas
BondStats reference content is independently written. Mathematical relationships, abbreviations and market conventions are presented for educational and analytical use.