货币银行与金融市场讲义-第四讲.pdfVIP

Chapter 4: Understanding Interest Rates Measuring Interest Rates Four kinds of credit market instruments Simple loans principal and interest returned at maturity Fixed-payment loans e.g. mortgages, car loans Coupon bond periodic coupon payment + face value payout at maturity Note: coupon rate= (coupon payment)/(face value) Discount bond (zero-coupon bond) pays face value at maturity, sells at discount Present Value $x tomorrow is not as valuable as $x today So how do we calculate the present value (i.e. value in todays $) of a cash flow into the future? Example : what is a payment of $1000 after 3 years worth, in todays $? Well, ... how much would you have to invest today at current interest rates, in order to accumulate $1000 in 3 years? Thats the answer. x(1+i)=amount youd have after year 1 i decimal interest rate on simple loan (e.g. savings deposit) {x(1+i)}(1+i)=amount youd have after 2 years 2 =x[(1+i) ] [{x(1+i)}(1+i)](1+i)=amount youd have after 3 years 3 =x[(1+i) ] n =x[(1+i) ]=amount youd have after n years, from investing $x @ i Now solve the following for x: 3 x[(1+i) ]=1000 * 3 x =(1000)/ [(1+i) ] e.g. let i=.1 (10% interest) * x =$751.31 Int