Course Objectives Chapter 4 Econ 423 - Financial Markets Lauren Heller, Summer 2009 Chapter 4: Interest Rate Fluctuations and Asset Pricing Objectives – By the end of this chapter, you should be able to: o Calculate the expected return and standard deviation of returns on an asset. o Identify the four main determinants of asset demand, and be able to explain the effects of a change in each determinant on the quantity of assets demanded. o Derive a demand and supply curve for an asset when given a series of bond prices and/or interest rates. o Understand the factors that shift the bond demand and supply curves, and be able to show the effects of these changes graphically, quantitatively, and in words. o Explain the ways in which the asset market approach can be applied to commodities markets,
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