ABSTRACT
Letusnowintroducetheshort-terminterestrateonbillsandanalysethe termstructureofratesatasinglepointoftime.Thebills,whichyieldthe shortrater 0 ,aretakentohaveaperiodtoredemptionoft 0tot 1 ,which issupposedtobeidenticalwiththeperiodforwhichexpectationsare formedabouttheyieldofconsols.Newdecisionsaboutthecomposition ofassetsaremadeonlyatthebeginningofsuchperiods.
