第10章讲义 跨时期选择.pptVIP

Valuing Securities （证券） A financial security （金融证券）is a financial instrument that promises to deliver an income stream. E.g.; a security that pays $m1 at the end of year 1, $m2 at the end of year 2, and $m3 at the end of year 3. What is the most that should be paid now for this security? Valuing Securities The security is equivalent to the sum of three securities; the first pays only $m1 at the end of year 1, the second pays only $m2 at the end of year 2, and the third pays only $m3 at the end of year 3. Valuing Securities The PV of $m1 paid 1 year from now is The PV of $m2 paid 2 years from now is The PV of $m3 paid 3 years from now is The PV of the security is therefore Valuing Bonds （债券） A bond is a special type of security that pays a fixed amount $x for T years (its maturity date) and then pays its face value （面值） $F. What is the most that should now be paid for such a bond? Valuing Bonds Valuing Bonds Suppose you win a State lottery. The prize is $1,000,000 but it is paid over 10 years in equal installments of $100,000 each. What is the prize actually worth? Valuing Bonds is the actual (present) value of the prize. Valuing Consols A consol is a bond which never terminates, paying $x per period forever. What is a consol’s present-value? Valuing Consols Valuing Consols Solving for PV gives Valuing Consols E.g. if r = 0.1 now and forever then the most that should be paid now for a console that provides $1000 per year is The Intertemporal Budget Constraint is the “future-valued” form of the budgetconstraint since all terms are in period 2values. This is equivalent to which is the “present-valued” form of theconstraint since all terms are in period 1values. As r rises, it is as if period 1 consumption is more expensive or period 2 consumption cheaper. The Intertemporal Budget Constraint If we allow for inflation or deflation, then prices of consumption goods may be different in two periods. Use p1 and p2 to denote prices for consum