【正文】 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 12 42 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。 foreign consumer amp。vis the rest of the world ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 12 9 The Goals of Central Banking ? Through its influence over interest rates and the growth of the money supply, the central bank is able to influence the economy’s progress toward each of the goals. ? However, the goals often conflict and tradeoffs have to be accepted. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 12 10 The Channels Through Which Central Banks Work Policy tools of the central bank Volume amp。 credit availability Market interest rates Level amp。 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 12 51 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 12 52 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 12 53 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 12 54 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 12 55 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 12 56 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 12 57 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 12 58 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。 availability of credit Size amp。Money and Capital Markets 12 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose McGraw Hill / Irwin Slides by YeeTien (Ted) Fu Money Market Instruments: Commercial Paper, Federal Agency Securities, Bankers’ Acceptances, and Eurocurrency Deposits ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 12 2 Money and Capital Markets 13 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose