thebehaviorofinterestrates(编辑修改稿)

thebehaviorofinterestrates(编辑修改稿)内容摘要：

fect shows an increase in interest rates because an increase in the money supply may lead people to expect a higher price level in the future (the demand curve shifts to the right). Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 528 PriceLevel Effect and ExpectedInflation Effect • A one time increase in the money supply will cause prices to rise to a permanently higher level by the end of the year. The interest rate will rise via the increased prices. • Pricelevel effect remains even after prices have stopped rising. • A rising price level will raise interest rates because people will expect inflation to be higher over the course of the year. When the price level stops rising, expectations of inflation will return to zero. • Expectedinflation effect persists only as long as the price level continues to rise. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 529 FIGURE 11 Response over Time to an Increase in Money Supply Growth Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 530 FIGURE 12 Money Growth (M2, Annual Rate) and Interest Rates (ThreeMonth Treasury Bills), 1950–2020 Sources: Federal Reserve: Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. Chapter 6 The Risk and Term Structure of Interest Rates Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 532 FIGURE 1 LongTerm Bond Yields, 1919–2020 Sources: Board of Governors of the Federal Reserve System, Banking and Moary Statistics, 1941–1970。 Federal Reserve: Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 533 Risk Structure of Interest Rates • Bonds with the same maturity have different interest rates due to: – Default risk – Liquidity – Tax considerations Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 534 Risk Structure of Interest Rates • Default risk: probability that the issuer of the bond is unable or unwilling to make interest payments or pay off the face value – . Treasury bonds are considered default free (government can raise taxes). – Risk premium: the spread between the interest rates on bonds with default risk and the interest rates on (same maturity) Treasury bonds Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 535 FIGURE 2 Response to an Increase in Default Risk on Corporate Bonds Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 536 Table 1 Bond Ratings by Moody’s, Standard and Poor’s, and Fitch Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 537 Risk Structure of Interest Rates • Liquidity: the relative ease with which an asset can be converted into cash – Cost of selling a bond – Number of buyers/sellers in a bond market • Ine tax considerations – Interest payments on municipal bonds are exempt from federal ine taxes. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 538 FIGURE 3 Interest Rates on Municipal and Treasury Bonds Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 539 Term Structure of Interest Rates • Bonds with identical risk, liquidity, and tax characteristics may have different interest rates because the time remaining to maturity is different Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 540 Term Structure of Interest Rates • Yield curve: a plot of the yield on bonds with differing terms to maturity but the same risk, liquidity and tax considerations – Upwardsloping: longterm rates are above shortterm rates – Flat: short and longterm rates are the same – Inverted: longterm rates are below shortterm rates Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 541 Facts Theory of the Term Structure of Interest Rates Must Explain 1. Interest rates on bonds of different maturities move together over。