The Term Structure of Interest Rates: Theories, Models and Positiveness

This article concisely illuminates some theories about the term structure of interest rates. It analyses and compares the major characteristics of the equilibrium models and the arbitrage-free models, one-factor models and multi-factor models of term structure of rates. Then the one-week, two-week and four-week repurchase rates of government bonds are regressed to get three Vasicek stochastic models. At last this paper provides some ways to im-prove government bonds market.