《国际货币与金融经济学 Daniels》ch05.pptVIP

Interest Yields, Interest-Rate Risk, and Derivative Securities Interest Rates To understand the risks owing to interest rate variations, how to minimize those risks, or how to profit from them requires an understanding of how interest rates and the prices of financial instruments are related. Principal is the amount of credit extended when one makes a loan or purchases a bond. Interest Yields Interest is the payment by the issuer of a financial instrument that compensates the purchaser for the use of their funds. The interest rate is the amount of interest expressed as a percentage of the principal. Capital gain is a rise in the value of a financial instrument at the time it is sold relative to its market value at the time it was purchased. Discounted Present Value Discounted present value is the value today of a payment to be received at a future date. Calculating discounted present value: The value today of a payment to be received at a future date. Payment one year from now/ 1+ r . Discounted present value of payment to be received n years in the future: Payment n years from now/ 1+ r n. Calculating the Yield to Maturity Perpetuity: A bond with an infinite term to maturity. Perpetuity price C/r. Simple rule: Prices of existing bonds are inversely related to changing market interest rates. Term to Maturity and Interest-Rate Risk Interest rate risk is the possibility that the market value of a financial instrument will change as interest rates vary. Capital loss is a decline in the market value of a financial instrument at the time it is sold as compared with its market value at the time it was purchased. The Term Structure Term Structure of interest rates is the relationship among yields on financial instruments with identical risk, liquidity, and tax characteristics but differing terms to maturity. Yield Curve is a chart illustrating the relationship among yields on bonds that differ only in their term to maturity. Yield Curves Yield Curves Economists offe