[资本市场和金融机构].2.ppt

Interest Rates Definition Fluctuation of interest rates Shifts on Demand Shifts on Supply Types of interest rates Analysis of Bond Valuation Risk and Term Structure of Interest Rates (TSIR) 5.1 Determinants of Risk Structure (RSIR) 5.2 TSIR (Yield Curve). Theories: A) Pure Expectations Theory B) Market Segmentation Theory C) Liquidity Theory Predictive Power of the Yield Curve 6.1 Future interest rates 6.2 Economic growth Conclusions 1. Interest Rate (i) i = Cost of borrowing or lending money It plays a pivotal role in: the Investment and Financing of assets (real, financial) by individuals, companies, governments and FI the performance of the economy Determined in the Debt Markets (supply and demand) and by government intervention. Central Bank ? Monetary policy (i, M) Is there an appropriate level of i? Interest Rate How the interest rates are determined? What explains the fluctuation of interest rates? Most accurate measure of interest rate: Yield to maturity Example applied to bond valuation Determination of Interest Rate (i) Approaches 1) Analysis of Demand of loanable funds and Supply of loanable funds 2) Analysis of Demand for and supply of bonds Supply of loanable funds by households and firms. The higher the i the higher the quantity of loanable funds offered Demand of loanable funds by households and firms Reasons for Consumer? For Firms? Total Demand = Demand by households and firms Determinants of the Demand and Supply Supply and Demand for Loanable Funds Interest Rate (i) What determines the supply of loanable funds? The supply of loanable funds is determined by the interest rate offered to savers. A higher interest rate induces households to consume less today (save) in favor of greater consumption in the future. Firm also may have excess of cash that may be loaned (e.g., purchase of other firm’s bond issue) instead of invested (real assets) because of the non availability of projects