Ch07

Chapter 7 Inflation & Deflation, Yield Curves, and Duration: Impact on Interest Rates and Asset Prices

 Learning Objectives  ,[object Object],[object Object],[object Object]

 Learning Objectives  ,[object Object],[object Object]

Introduction ,[object Object],[object Object]

Inflation and Interest Rates ,[object Object],7

Inflation and Interest Rates ,[object Object],Source: U.S. Department of Commerce and Board of Governors of the Federal Reserve System

Inflation and Interest Rates ,[object Object],[object Object],[object Object],[object Object]

Inflation and Interest Rates ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Inflation and Interest Rates ,[object Object],[object Object]

Inflation and Interest Rates ,[object Object],[object Object],[object Object]

Inflation and Interest Rates The Impact of Fully Anticipated Inflation on Interest Rates

Inflation and Interest Rates ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Inflation and Stock Prices ,[object Object],[object Object],[object Object]

Inflation-Adjusted Securities ,[object Object],[object Object],[object Object],[object Object],[object Object]

Inflation-Adjusted Securities ,[object Object]

Inflation-Adjusted Securities Source: Economic Trends, Federal Reserve Bank of Cleveland, Aug & Dec 2003

The Maturity of a Loan ,[object Object],[object Object],[object Object]

The Maturity of a Loan ,[object Object],Source: Economic Trends, Federal Reserve Bank of Cleveland, June 2001

The Maturity of a Loan ,[object Object],[object Object]

The Segmented-Markets and Preferred Habitat Arguments ,[object Object],[object Object]

Research Evidence on Yield Curves ,[object Object],[object Object],[object Object]

Research Evidence on Yield Curves The Level, Slope, and Curvature of Yield Curves

Uses of the Yield Curve ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Duration: A Different Approach to Maturity ,[object Object],[object Object],%  in a security’s price over time %  in a security’s yield over time

Duration: A Different Approach to Maturity ,[object Object],[object Object]

Duration: A Different Approach to Maturity ,[object Object]

Duration: A Different Approach to Maturity ,[object Object],C t = the expected principal/interest payment in time period t y = the security’s yield to maturity, with maturity reached at the end of n periods

Duration: A Different Approach to Maturity

Duration: A Different Approach to Maturity ,[object Object],[object Object],[object Object]

Duration: A Different Approach to Maturity ,[object Object],[object Object],[object Object],[object Object],[object Object]

Duration: A Different Approach to Maturity ,[object Object],[object Object],[object Object],[object Object]

Markets on the Net ,[object Object],[object Object],[object Object],[object Object],[object Object]

Markets on the Net ,[object Object],[object Object],[object Object],[object Object]

Chapter Review ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Chapter Review ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Chapter Review ,[object Object],[object Object],[object Object],[object Object],[object Object]

Ch07

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Ch07