Measuring and Calculating Interest Rates and Financial Asset Prices参考.ppt

Measuring and Calculating Interest Rates and Financial Asset Prices The Impact of Inflation Deflation, Yield Curves, and Duration on Interest Rates and Asset Prices ? Learning Objectives ? To learn what inflation is and how it can impact interest rates and asset prices. To understand the greater concern today over deflation and how deflation may affect the economy and financial system. To see how yield curves arise and explore the ideas about what determines the shape of the yield curve at any point in time. ? Learning Objectives ? To discover how yield curves can be a useful tool for those interested in investing their money and in tracking the health of the economy. To look at the concept of duration and see how it can assist in the making of investment choices and in protecting against the risk of changing interest rates. Inflation and Interest Rates Inflation refers to the rise in the average level of prices for all goods and services. Inflation and Interest Rates In recent years, the U.S. inflation and interest rates appear to be fairly strongly correlated. Inflation and Interest Rates Nominal and Real Interest Rates In general, lenders will attempt to charge nominal rates of interest that give them their desired real rates of return on their loanable funds based upon their expectations regarding inflation. nominal rate = published or quoted rate real rate = rate measured in terms of the actual purchasing power Inflation and Interest Rates The Fisher Effect In a 1896 classic article, economist Irving Fisher argued that expected nominal interest rate = expected real rate + inflation premium + (expected real rate ? inflation premium) ? expected real rate + inflation premium The inflation premium measures the rate of inflation expected by investors in the marketplace during the life of a particular financial instrument. Inflation and Interest Rates The Harrod-Keynes Effect of Inflation Building upon the Keynesian liquidity preference theory, Harro