INTRATEDETERMINANTSCLASS

INTRATEDETERMINANTSCLASS - 1 Interest Rates Key Points ¢...

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Unformatted text preview: 1 Interest Rates ¡ Key Points ¢ determinant of THE (overall) interest rate ¡ interest rate trends ¢ explanation of differences in interest rates ¡ term structure and yield curves ¡ risk structure 1 ¡ risk and tax considerations ¢ Stock Valuation ¡ Discounted dividends/Gordon model ¡ Efficient Markets Hypothesis and Random walks ¡ CLICK IF HAPPY (OR NOT) In the News? 2 Course Issues ¢ Final Exam Thursday 12/16 noon ***Milledoler 100** - NOT regular room ¢ ODE – Target, White ¢ Speed networking 3 2 Explaining ‘the’ Interest Rate ¡ S & D for Money – Liquidity Preference ¢ Md&Ms determine ‘the’ nominal interest rate level ¡ S&D for Bonds ¢-> Pb Pb up->i down 4 ¢ > Pb Pb up >i down ¢ i=C/Pb Pb up I down ¡ S&D for loanable funds ¢ Broader view –all funds ¢ S&I – i real Interest Rates Since the Early 1980’s ¡ Fisher effect ¡ lower expected inflation increased demand and reduced supply of bonds P ↑→ r ↓ 5 Does increasing the money supply lower interest rates? ¡ Short-run YES for SR nominal rates ¢ Md&Ms ¢ Ms up -> i nominal down ¡ i real? With sticky prices, yes in SR LR rates in the SR?...
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INTRATEDETERMINANTSCLASS - 1 Interest Rates Key Points ¢...

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