货币银行Chap006.ppt

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 6-* Interest-Rate Risk Interest-rate risk arises from the fact that investors don’t know the holding period return of a long-term bond. The longer the term of the bond, the larger the price change for a given change in the interest rate. For investors with holding periods shorter than the maturity of the bond, the potential for a change in interest rates creates risk. The more likely the interest rates are to change during the bondholder’s investment horizon, the larger the risk of holding a bond. 6-* When the boom in house prices ended, holders of the private-label securities suffered large losses. In the resulting financial crisis in 2007, private securitization of mortgages collapsed. Although it has yet to rebound, some underwriters were seeing an opportunity to revive it. End of Chapter Six * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 6-* Bond Supply, Bond Demand and Equilibrium in the Bond Market Investor: The higher the price, the more tempting it is to sell a bond they currently hold. Company seeking to finance a project: The higher the price at which they can sell bonds, the cheaper it is to borrow. For a $100 one-year zero-coupon bond, the supply will be higher at $95 than it will be at $90, all other things being equal. 6-* Bond Supply, Bond Demand and Equilibrium in the Bond Market The bond demand curve is the relationship between the price and the quantity of bonds that investors demand, all else equal. The price of bonds is inversely related to the yield, the demand curve implies that the higher the demand for bonds, the higher the yield. The bond demand curve slopes downward. Why? 6-* Investors: The lower the price bondholders must pay for a fixed-dollar payment on a future date, the more likely they are to buy a bond. For a $100 one-year zero-coupon bond, the demand will be higher at $90 than it will be at $95, all other things being equal. Bond Supply, Bond Demand a