英文版金融第四章.pptVIP

Chapter 4 Why Do Interest Rates Change? How Factors Shift the Demand Curve 4. Liquidity Liquidity of bonds ?, Bd ? Bd shifts out to right OR Liquidity of other assets ?, Bd ? Bd shifts out to right Shifts in the Demand Curve Summary of Shifts in the Demand for Bonds Wealth: in a business cycle expansion with growing wealth, the demand for bonds rises, conversely, in a recession, when income and wealth are falling, the demand for bonds falls Expected returns: higher expected interest rates in the future decrease the demand for long-term bonds, conversely, lower expected interest rates in the future increase the demand for long-term bonds Summary of Shifts in the Demand for Bonds (2) Risk: an increase in the riskiness of bonds causes the demand for bonds to fall, conversely, an increase in the riskiness of alternative assets (like stocks) causes the demand for bonds to rise Liquidity: increased liquidity of the bond market results in an increased demand for bonds, conversely, increased liquidity of alternative asset markets (like the stock market) lowers the demand for bonds Factors That Shift Supply Curve We now turn to the supply curve. We summarize the effects in this table: Shifts in the Supply Curve Profitability of Investment Opportunities Business cycle expansion, investment opportunities ?, Bs ?, Bs shifts out to right Shifts in the Supply Curve 2. Expected Inflation πe ?, Bs ? Bs shifts out to right 3. Government Activities Deficits ?, Bs ? Bs shifts out to right Shifts in the Supply Curve Summary of Shifts in the Supply of Bonds Expected Profitability of Investment Opportunities: in a business cycle expansion, the supply of bonds increases, conversely, in a recession, when there are far fewer expected profitable investment opportunities, the supply of bonds falls Expected Inflation: an increase in expected inflation causes the supply of bonds to increase Government Activities: higher government deficits increase the supply of bonds, conversely, gove