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INTRATEDETERMINANTSCLASS - Interest Rates Key Points...

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1 1 Interest Rates square6 Key Points boxshadowdwn determinant of THE (overall) interest rate square6 interest rate trends square6 The real rate boxshadowdwn explanation of differences in interest rates square6 term structure and yield curves square6 risk structure square6 risk and tax considerations boxshadowdwn Stock Valuation square6 Discounted dividends/Gordon model square6 Efficient Markets Hypothesis and Random walks 2 In the News? 4% INCREASE 19.6% 2007 TO 23.8% 2010 3 Course Issues boxshadowdwn Final Exam Conflicts – what is it? square6 see me after class or office hours with documentation starting 12/1 square6 Makeups only if documented conflict in advance boxshadowdwn Graduating Seniors? boxshadowdwn Review Guide, Essential Questions,Q&A boxshadowdwn Grade book problems-check NOW! boxshadowdwn Grading explanation boxshadowdwn Extra Credit boxshadowdwn Last Class Tues 12/13 boxshadowdwn Final Exam Friday 12/23 8-11am MI100 A 850 B+ 800 B 780 C+ 740 C 670 D 600 F < Total Points Approximate Curve
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2 4 Explaining ‘the’ Interest Rate square6 S & D for Money – Liquidity Preference boxshadowdwn Md&Ms determine ‘the’ nominal interest rate level square6 S&D for Bonds boxshadowdwn -> Pb Pb up->i down boxshadowdwn i=C/Pb Pb up I down square6 S&D for loanable funds boxshadowdwn Broader view –all funds boxshadowdwn S&I – i real 5 Interest Rates Since the Early 1980’s square6 Fisher effect square6 lower expected inflation increased demand and reduced supply of bonds P ↑→ r And to the present 6
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3 7 Does increasing the money supply lower interest rates?
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