公司理财教材新chap5.pptVIP

Conclusion The bond yields represent the combined effect of no fewer than six factors. The first one is the real rate of interest. On top of the real rate are five premiums representing compensation for (1) expected future inflation, (2)interest rate risk, (3)default risk, (4)taxability, and (5)lack of liquidity. 5.3 Inflation and Interest Rates Suppose the one-year interest rate is 15.5%. Imagine a pizza costs $5 today. Assume the inflation rate is 5%. If you have $100 today, how many pizzas can you buy today? If you deposit $100 in a bank, how many pizzas can you buy next year? Real rate of