Chapter_18　Financial Markets and Asset Prices多恩布什宏观经济学（）PPT培训资料.pptVIP

Chapter 18 Financial Markets and Asset Prices Item Item Item Etc. McGraw-Hill/Irwin Macroeconomics, 10e ? 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Introduction Financial markets link the macroeconomy and government policy directly to the lives of everyday people Changes in interest rates affect our ability to finance a home, car Movements in the stock market determine the value of pensions In this chapter we examine the behavior of three financial markets: Bond market Stock market Foreign exchange market Interest Rates: Long and Short Term Interest rates summarize the promised repayment terms on bonds, loans → not just one interest rate Interest rates differ according to: Credit worthiness of issuer Tax treatments Risk Term Other factors The factor of greatest focus here is the term or the length of time the interest rate covers The relation between interest rates of different maturities is called the term structure of interest Interest Rates: Long and Short Term Figure 18-1 shows interest rates for U.S. Treasury securities from 3 months to 30 years Interest rates of different maturities mostly go up and down together The gap between long term rates and short-term rates varies Long-term rates are usually higher than short-term rates [insert Figure 18-1 here] Interest Rates: Long and Short Term The problem is, in 2020 we do not know 1i2021 or 1i2022 with certainty Need to modify our equation in two ways: Today’s long-term rate depends on the current short-term rate and the expected future short-term rates Uncertainty implies risk, and long-term investments command a term premium, PR, to compensate for this risk → The term structure equation becomes: (1) Interest Rates: Long and Short Term Table 18-1 shows the average term premiums based on the interest rates shown in Figure 18-1 Equation (1) shows the expectations theory of the term structure Term premiums vary over