Lecture21 Management(公司金融讲义(北大).pdf

Principles of Corporate Finance 21. Debt Management Seventh Edition Richard A. Brealey Stewart C. Myers Slides by Matthew Will Slides Edited by Minggao Shen 21- 2 Topics Covered The Classical Theory of Interest The Term Structure of Interest Rate (利率期 限结构) Yields to Maturity (YTM, 到期收益率） Spot/Forward Rates (即期利率/远期利率) Explaining the Term Structure Allowing for the Risk of Default McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 21- 3 Debt Interest Rates Classical Theory of Interest Rates (Economics) developed by Irving Fisher Nominal Interest Rate = The rate you actually pay when you borrow money Real Interest Rate = The theoretical rate you pay when you borrow money, as determined by supply and demand McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 21- 4 Debt Interest Rates r Supply Real r Demand $ Qty McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 21- 5 Debt Interest Rates Nominal r = Real r + expected inflation Real r is theoretically somewhat stable while inflation is a large variable. Q: Why do we care? A: This theory allows us to understand the Term Structure of Interest Rates. Q: So What? A: The Term Structure tells us the cost of d