【正文】 payment Channel for government money amp。 Rate of Return ? Maturities of . mercial paper range from three days (“weekend paper”) to nine months. ? Most mercial paper is issued at a discount from par, and yields to the investor are calculated by the bank discount method, just like Treasury bills. DR = Par value – Purchase price ? 360 . Par value Days to maturity ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 9 Growth of Commercial Paper ? The volume of mercial paper has grown rapidly due to its relatively low cost and high quality, as well as the expanding use of credit enhancements. 1960 $ billion 1970 1980 1990 2020 1, 2020 1, Year Outstanding Volume of Paper in the . Effect of weaker economy amp。 Rate of Return on Commercial Paper ? Growth of Commercial Paper ? Market Yields on Commercial Paper ? Advantages amp。 other money market borrowers (demanders) Acmodating banks Funds brokers The Central Bank Absorbing excess funds Supplying additional funds ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 69 Federal Funds ? Total federal funds borrowings by banks in the . exceeded $600 billion as the 21st century began. ? Most federal funds loans are either overnight transactions or continuing contracts that h。 governmentsponsored credit agencies Borrowing funds from the open market and from other government agencies Granting loans to disadvantaged sectors Guaranteeing loans made by other lenders Buying loans from the secondary market ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 18 Federal Agency Securities ? The agency market has soared in recent years, with the volume of outstanding securities climbing from about $2 billion during the 1950s to almost $2 trillion today. ? Agency securities are generally short to medium term in maturity (running out to about 10 years). ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 19 The Marketing of Agency Issues ? The most active buyers of agency securities include banks, state and local governments, government trust funds, and the Federal Reserve System. ? The Federal Reserve is authorized to conduct open market operations in agency IOUs. ? Major securities dealers who handle . government securities also generally trade in agency issues. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 20 Bankers’ Acceptances ? A bankers’ acceptance is a time draft drawn on and endorsed by an importer’s bank. ? Acceptances are used in international trade because most exporters are uncertain of the credit standing of their importers. ? The issuing bank unconditionally guarantees to pay the face value of the acceptance when it matures, thus shielding exporters and investors in international markets from default risk. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 21 Bankers’ Acceptances ? Acceptances carry maturities ranging from 30 to 270 days, with 90 days being the most mon. ? They are traded among financial institutions, industrial corporations, and securities dealers as a highquality investment and source of ready cash. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 22 How Acceptances Arise Importer applies for line of credit Importer’s bank issues letter of credit in favor of exporter Letter of credit authorizes the drawing of a time draft Importer’s bank accepts time draft from exporter’s bank Importer’s bank pays exporter’s bank discounted value of bankers’ acceptance, and then holds or sells it Bankers’ acceptance is redeemed at maturity ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 23 The Growth and Decline of Acceptance Financing ? The volume of US$ acceptances outstanding grew rapidly, from less than $400 million in 1950, to slightly more than $7 billion in 1970, and almost $80 billion in 1984. ? Then the volume declined sharply to $10 billion in 2020, as several leading export nations entered a recession, as economic problems developed in Asia, and as businesses turn to other payment and financing methods. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 24 Acceptance Rates ? Acceptances do not carry a fixed rate of interest, but are sold at a discount in the open market like Treasury bills. ? The yield on acceptances is usually only slightly higher than the yield on Treasury bills, and close to the negotiable CD rates offered by major banks, because of the high credit quality of the banks that issue the acceptances and CDs. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 25 Acceptance Rates Data Source: Board of Governors of the Federal Reserve System % 33 . 544 . 555 . 566 . 51991 1993 1995 1997 1999 2020C o m m e rci a l Pa p e rBa n ke rs 39。 A cce p t a n ce sBa n k Pri m e L o a n sT re a s u ry Bi l l s% ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 11 Commercial Paper Advantages ?Relatively low interest rates ?Flexible interest rates choice of dealer or direct paper ?Large amounts may be borrowed conveniently ?The ability to issue paper gives considerable leverage when negotiating with banks ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 11 12 Commercial Paper Disadvantages ?Risk of alienating banks whose loans may be needed when a