J hawkins econ 136 financial economics 8 22 credit

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: −t Fixed Income VI: R. J. Hawkins Econ 136: Financial Economics 8/ 22 Credit Ratings Corporate Bond Ratings: S&P AAA AA A BBB BB B CCC/C Moody’s Aaa Aa A Baa Ba B Caa/C Meaning Highest Quality High Quality Speculative Very Poor Fixed Income VI: R. J. Hawkins Cumulative Default Rate (%) 3-year 5-year 0.12 0.29 0.12 0.30 0.30 0.60 1.12 2.48 5.61 10.15 14.77 21.21 36.80 43.96 Econ 136: Financial Economics 13/ 22 Funds Transfer Pricing 14 Loan Rate Interest Rate (%) 12 10 Yield Curve 8 6 4 Funding Rate 2 0 0 2 4 6 8 Maturity (years) Fixed Income III: R. J. Hawkins 10 Econ 136: Financial Economics 12 22/ 24 14 Keynes and the Trade Cycle (Keynes, 1936) Keynes’ four elements of the trade cycle: 1 A boom when “much of new investment showed a not unsatisfactory current yield, . . . ” 2 the onset of “disillusion . . . because doubts suddenly arise concerning the reliability of the prospective yield, . . . ” 3 “once doubt begins it spreads quickly, . . . ” 4 “at the onset of the slump there is probably much capital of which the marginal efficiency has become negl...
View Full Document

This note was uploaded on 01/23/2014 for the course ECON 136 taught by Professor Szeidl during the Fall '08 term at University of California, Berkeley.

Ask a homework question - tutors are online