北大货币银行04.pptVIP

Chapter 4 Measurement of Interest Rates Simple Loan Loan value (LV) = principal Payment: principal interest payment Straightforwardly, interest rate on simple loan = (interest payment / principal)*100% LV = Four Types of Credit Instruments 1. Simple loan principal, interest payment 2. Fixed-payment loan e.g., auto loans, mortgages 3. Coupon bond coupon payment, face or par value 4. Discount (zero coupon) bond price face value Yield to Maturity: Loans Yield to Maturity: Bonds Relationship Between Price and Yield to Maturity Dist