The economics of money, banking, and financial markets

Following the Financial News  The Monetary Aggregates  57

FYI  Where Are All the U.S. Dollars?  58

Summary 59  •  Key Terms 60  •  Questions 60  •  Applied Problems 61  •  Data Analysis 

Problems 62  •  Web Exercises 62  •  Web References 62

PART 2

 

Financial Markets  63

CHAPTER 4

The Meaning of Interest Rates 

64

Measuring Interest Rates ............................................................................................................ 64

Present Value ........................................................................................................................ 64

APPLICATION

 Simple Present Value ...........................................................................66

APPLICATION

 How Much Is That Jackpot Worth? ....................................................66

Four Types of Credit Market Instruments ............................................................................. 67

Yield to Maturity................................................................................................................... 68

APPLICATION

  Yield to Maturity on a Simple Loan ....................................................68

APPLICATION

  Yield to Maturity and the Yearly Payment on a Fixed-Payment Loan .... 70

APPLICATION

  Yield to Maturity and the Bond Price for a Coupon Bond .................71

APPLICATION

  Yield to Maturity on a Perpetuity .......................................................73

APPLICATION

  Yield to Maturity on a Discount Bond ................................................74

The Distinction Between Interest Rates and Returns .......................................................... 75

Global  Negative Interest Rates? Japan First, Then the United States, Then Europe  76

Maturity and the Volatility of Bond Returns: Interest-Rate Risk ............................................. 78

Summary .............................................................................................................................. 79

The Distinction Between Real and Nominal Interest Rates .............................................. 81

APPLICATION

  Calculating Real Interest Rates ...........................................................82

Summary 83  •  Key Terms 83  •  Questions 83  •  Applied Problems 84  •  Data Analysis  

Problems 85  •  Web Exercises 85  •  Web References 85