Add to ORKGBy solving an incompletemarkets model of multiperiod bond pricing backwards we show that the mean and autocorrelation properties of the term premiums in the yield curve can be a reection of the temporal distribution of uninsurable income shocks ie the term structure of en dowments Moreover agents can exhibit an equilibrium preferred habitat in bond maturities in the absence of binding portfolio restrictions When markets are complete idiosyncratic income risk plays no role in the ob servable properties of asset prices in general and multiperiod bond yields in particular A risk premium earned from holding a risky asset eg a two period discount bond for one period rather than a safe asset eg a oneperio