TAILIEUCHUNG - Lecture Principles of money, banking, and financial markets (12th edition): Chapter 5 - Ritter, Silber, Udell

Chapter 5 - The term and risk structure of interest rates. In this chapter you will learn to envision and draw the yield curve and describe the determinants of its slope, explain how risk is important in influencing interest rates, comprehend the impact on interest rates of income taxes. | Chapter 5 The Term and Risk Structure of Interest Rates Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Learning Objectives • Envision and draw the yield curve and describe the determinants of its slope • Explain how risk is important in influencing interest rates • Comprehend the impact on interest rates of income taxes Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 5-2 The Term Structure of Rates and the Yield Curve • Term Structure—Relationship among Yields of different maturities of the same type of security • Yield Curve (Figure ) – Graphical relationship between yield and maturity – Yield is measured on the vertical axis and term to maturity is on the horizontal Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 5-3 1 The Term Structure of Rates and the Yield Curve (Cont.) • Yield Curve (Figure ) (Cont.) – The basic question—does the curve slope upward, downward, or horizontal (Figure ) – In the real world yields on all maturities tend to move together while there are distinct, divergent patterns between movements in short-term and longterm yields. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 5-4 FIGURE Three alternative yield curves. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 5-5 The Term Structure of Rates and the Yield Curve (Cont.) • Different Theories of the Shape of the Yield Curve – Supply and Demand • Determined by relative supply/demand of different maturities • Deals with each maturity by itself and ignores the interrelationships between different maturities of the same security Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 5-6 2 The Term Structure of Rates and the Yield Curve (Cont.) • Different Theories of the Shape of the Yield Curve (Cont.) – The Pure Expectations Approach • Short-term and long-term securities are very good substitutes for each other within investor’s portfolios who collectively impact the market • .

• Ngân hàng - Tín dụng
• Financial markets
• Financial institutions
• Monetary policy
• International finance
• Monetary theory
• Risk structure
• Lecture Financial markets
• Thị trường tài chính
• Financial futures markets
• Valuation of financial futures
• Interest rate futures
• Lecture Financial markets and institutions
• Financial institutions markets
• Capital markets
• Money markets
• Derivative securities markets
• Futures markets
• Option markets
• Swap markets
• Foreign exchange derivative markets
• Bank management
• Types of Financial Markets
• Securities traded
• Valuation of securities
• Money market yields
• Bond markets
• Municipal bonds
• Mortgage markets
• Primary mortgage market
• Stock markets
• Common stock
• Foreign exchange markets
• Foreign exchange
• Commercial banks
• Financial statements
• Risks at financial institutions
• Market risk
• Exchange rates
• Economics 252
• Efficient markets
• Excess volatility
• Efficient Markets Hypothesis
• Interest rate derivative markets
• Interest rate swaps
• Mortgage backed securities
• Globalization of mortgage markets
• Financial markets and institutions
• The financial system
• Interest rates change
• Financial markets efficient
• Term structure affect interest rates
• The stock market
• The mortgage markets
• The international financial system
• Financial regulation
• Interest rate fundamentals
• Interest rates
• Security valuation