Tài chính doanh nghiệp - Money market instruments: treasury bills, repurchase agreements, federal funds, and bank cdsCD interest rates are computed as a yield to maturity (ytm) on a 360-day basis. Interest = term in days deposit promised income 360 principal ytm In secondary market trading, the bank discount rate (DR) is used as a measure of CD yields. DR = Par value – Purchase price 360 . Par value days to maturity
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Tài chính doanh nghiệp - Introduction to the money marketThe foundation of the market’s structure is the level of yields on Treasury bills. Most other yields in the money market are scaled upward from Treasury bill rates. The key price and yield determinants are safety, liquidity, marketability, and taxability.
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Tài chính doanh nghiệp - Interest rate forecasting & hedging: Swaps, financial futures, & optionsThe Influence of the Business Cycle in Shaping Interest Rates and Asset Prices Relative Movements in Short- and Long-Term Interest Rates and Security Prices over the Business Cycle Seasonality in Market Interest Rates
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Tài chính doanh nghiệp - Marketability, default risk, call privileges, prepayment risk, taxes, and other factors affecting interest ratesMarketability – Can an asset be sold quickly? Marketability is positively related to the size and reputation of the institution issuing the securities and to the number of similar securities outstanding. However, marketability is negatively related to yield. Liquidity – A liquid financial asset is readily marketable. Moreover, its price tends to ...
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Tài chính doanh nghiệp - The impact of inflation & deflation, yield curves, and duration on interest rates and asset pricesThe U.S. Treasury offers TIPS (Treasury Inflation Protected Securities) and “I bonds” for investors who want some protection against inflation. Annual nominal interest payment from a TIPS = inflation-adjusted promised nominal value coupon rate When the public expects higher inflation, inflation-adjusted securities rise in value.
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Tài chính doanh nghiệp - Measuring and calculating interest rates and financial asset pricesThe U.S. Consumer Credit Protection Act of 1968 (Truth in Lending) requires lending institutions to calculate and tell the borrower the annual percentage rate (APR) he or she is actually paying. The constant ratio formula usually gives a close approximation to the true APR.
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Tài chính doanh nghiệp - The determinants of interest rates: Competing ideasIf the money and capital markets are highly efficient, then interest rates will always be very near their equilibrium levels, and the optimal forecast of next period’s interest rate is the current interest rate. Interest rates will change only if entirely new and unexpected information appears, and the direction of change depends on the public’s c...
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Tài chính doanh nghiệp - The future of the financial system and the money and capital marketsAging population - there is a greater need for retirement, tax and estate planning Changing basic family unit - the rise in the proportion of single-parent households, parents and children living apart, immigrants, and well-educated working women will increase the demand for new forms of housing, daycare facilities, flexible work schedules, and le...
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Tài chính doanh nghiệp - Key sources of financial informationAdverse Selection. A bank that sets one price for all its checking account customers runs the risk of being adversely selected against by its high-balance, low-activity (and hence most profitable) customers. Solution: Enabling customer signaling via a price schedule for different account plans.
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Tài chính doanh nghiệp - Financial assets, money, financial transactions, and financial institutionsPrimary Securities (direct claims against ultimate borrowers in the form of loan contracts, stocks, bonds, notes, etc.) Secondary Securities (indirect claims against ultimate borrowers issued by financial intermediaries in the form of deposits, insurance policies, retirement savings accounts, etc.)
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