Tài chính doanh nghiệp - Money and banking (lecture 16)Increased Risk reduces Bond Demand. • The resulting shift to the left causes a decline in equilibrium price and an increase in the bond yield. • A bond yield can be thought of as the sum of two parts: • the yield on the Treasury bond (called “benchmark bonds” because they are close to being risk-free) and • a risk spread or default risk pr...
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Tài chính doanh nghiệp - Money and banking (lecture 15)A business-cycle downturn shifts the bond supply to the left and the bond demand to the left. • In this case the bond price can rise or fall, depending on which shift is greater. • But interest rates tend to fall in recessions, so bond prices are likely to increase
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Money and banking (lecture 14)Bond Demand • The bond demand curve is the relationship between the price and quantity of bonds that investors demand, all other things being equal. • As the price falls, the reward for holding the bond rises, so the demand goes up
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Tài chính doanh nghiệp - Money and banking (lecture 13)A consol offers only periodic interest payments; the borrower never repays the principal • There are no privately issued consols because only governments can credibly promise to make payments forever • The price of a consol is the present value of all the future interest payments, which is a bit complicated because there are an infinite nu...
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Tài chính doanh nghiệp - Money and banking (lecture 12)Spreading Risk • Investments don’t always move predictably in opposite directions, so you can’t always reduce risk through hedging • You can lower risk by simply spreading it around and finding investments whose payoffs are completely unrelated • The more independent sources of risk you hold the lower your overall risk
20 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 516 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 11)We can measure risk by measuring the spread among an investment’s possible outcomes. There are two measures that can be used: • Variance and Standard Deviation • measure of spread • Value At Risk (VAR) • Measure of riskiness of worst case
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Tài chính doanh nghiệp - Money and banking (lecture 10)We need a definition of risk that focuses on the fact that the outcomes of financial and economic decisions are almost always unknown at the time the decisions are made. • Risk is a measure of uncertainty about the future payoff of an investment, measured over some time horizon and relative to a benchmark
32 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 577 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 9)Another use for compounding is to compute the percentage change per year when we know how much an investment has grown over a number of years • This rate is called average annual rate • If an investment has increased 20%, from 100 to 120 over 5 years • Is average annual rate is simply dividing 20% by 5? • This way we ignore compounding effe...
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Tài chính doanh nghiệp - Money and banking (lecture 8)How useful it is? • If you put $1,000 per year into bank at 4% interest, how much would you have saved after 40 years? • Taking help of future value concept, the accumulated amount through the saving will be $98,826 – more than twice the $40,000 you invested • How does it work?
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Tài chính doanh nghiệp - Money and banking (lecture 7)Nondepository Institutions • Government Sponsored Enterprises: • Federal credit agencies that provide loans directly for farmers and home mortgages, as well as guarantee programs that insure the loans made by private lenders. • HBFC • ZTBL • Khushhali bank • SME Bank • The government also provides retirement income and medical care to th...
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