The consequences of the absence of such opportunities are then equally difficult to determine. Formally, using the notation developed in previous sections, let A2 denote the term premium for one-year bonds maturing two years from today, date t. Gucci Thong Horsebit. The reason is that investors can differ in their preferences, commonly interpreted (in portfolio selection) as reflecting different investors' attitudes to risk. . If labour income is risky (perhaps because of the prospect of unemployment), this could affect the investor's willingness to bear financial risks, and consequently the 12 Kritzman and Rich (2002) explore the importance of risks associated with fluctuations in asset values throughout the period of investment, not just at the investor's horizon. Gucci Thong Horsebit. Thus, it might be that swap contracts represent the least-cost way of achieving a desired pattern of payoffs on an investment. Gucci Hi Tops Sneakers. The remainder of the chapter explores the determinants of the term structure, beginning in section 13.4 with the 'expectations hypothesis', a theory central to all explanations of the yield curve's shape. Gucci Thong Horsebit. In this case, if equity returns are i.i.d. then the longer the time horizon the smaller the probability of loss, justifying a high share of equity investment when young - the conventional recommendation, again.