21UIUC%20FIN%20300%20Bond%20Price%20Paths%20FA%2010%201.1

21UIUC%20FIN%20300%20Bond%20Price%20Paths%20FA%2010%201.1 -...

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University of Illinois College of Business Department of Finance Professor Jackson Macroeconomic Factors That Lead to Increasing Financial Asset Prices
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Money Market ( i %, $) Money Demand ($) Nominal Interest Rates = Money Supply ($)
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Aggregate Demand ($) Aggregate Price Level = Aggregate Supply (Output)
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Labor Market Labor Demand (Firms) Aggregate Wage Level = Labor Supply (Households/Productivity)
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Financial Capital Market Investor Demand ($) Price/Cost of Capital (k) = Supply (Firms; Securities)
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University of Illinois College of Business Department of Finance Professor Jackson Yield Curve Theory
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“Normal” Yield Curve 0 1 1 2 Nominal Interest Rate % Time To Maturity
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Yield Curve (Risk & Return) 0 1 1 2 Nominal Interest Rate % Time To Maturity Returns % Risk
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Yield Curve (Risk Premium) 0 1 1 2 Risk Premium (IP, DRP, LP, MRP) Real Interest Rate % Nominal Interest Rate % Nominal Interest Rate % Time To Maturity Risk Returns %
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Yield Curve (Short & Long Term) 0 1 1 2 Risk Premium (IP, DRP, LP, MRP)
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This note was uploaded on 02/10/2011 for the course FIN 300 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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21UIUC%20FIN%20300%20Bond%20Price%20Paths%20FA%2010%201.1 -...

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