【導(dǎo)讀】LearningObjectives?pricesintomotion.lenderforanagreed-upontimeperiod.economicgrowth.thepublic’sdemandformoney.thesupplyofsavings,derivedmainlyfrom. rewardforwaiting.r1. r2. profits,andtoalesserextent,byinterestrates.(budgetsurplus).

　　

【正文】 stRate Determination ? ? supply of securities D’ ? Price Securities ? Security Price Determination D S S’ ? ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 55 YieldAsset Price Relationships ? supply of loanable funds Interest Rate Loanable Funds ? D S InterestRate Determination ? ? demand for securities Price Securities ? Security Price Determination D S S’ ? D’ ? ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 56 Interest Rates Charged or Paid by Institutional Lenders ? The simple interest method assesses interest charges on a loan only for the period of time that the borrower has actual use of the borrowed funds. ? Interest = principal ? rate ? term ? The more frequently a borrower makes repayments on a loan, the lesser the total interest will be. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 57 Interest Rates Charged or Paid by Institutional Lenders ? In the addon rate approach, interest is calculated on the full principal of the loan, and the sum of interest and principal payments is divided by the number of payments to determine the dollar amount of each payment. ? In a single payment loan, the simple interest and addon methods give the same interest rate. However, as the number of installment payments increases, the borrower pays a higher effective rate under the addon method. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 58 Interest Rates Charged or Paid by Institutional Lenders ? The discount method determines the total interest charged to the customer on the basis of the amount to be repaid. However, the borrower receives as proceeds of the loan only the difference between the total amount owed and the interest bill. ? Hence, the effective interest rate is Interest paid ? 100 Net loan proceeds ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 59 Interest Rates Charged or Paid by Institutional Lenders ? Each monthly payment of a home mortgage loan first covers in full the monthly interest on the outstanding principal. The remainder is then applied to the principal of the loan, such that the amount owed is reduced progressively. ? The monthly payment ? ?? ? 112112112L1212?????? ??ttrrrwhere L = total amount owed r = annual loan interest rate t = number of years of the loan ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 60 Interest Rates Charged or Paid by Institutional Lenders ? The . Consumer Credit Protection Act of 1968 (Truth in Lending) requires lending institutions to calculate and tell the borrower the annual percentage rate (APR) he or she is actually paying. ? The constant ratio formula usually gives a close approximation to the true APR. ? ? 1 0 0P 1N2A PR ???mcm = number of payments in a year c = annual interest cost N = total number of payments P = principal of the loan ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 61 Interest Rates Charged or Paid by Institutional Lenders ? The pounding of interest means that the lender or depositor earns interest ine on both the principal amount and any accumulated interest. ? The formula for calculating the future value of a financial asset earning pound interest is: ? ?tmmr?? 1 PFVFV = future value of the asset P = principal value of the asset r = annual interest rate m = annual pounding frequency t = term of the asset in years ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 62 Interest Rates Charged or Paid by Institutional Lenders ? The . Truth in Savings Act of 1991 requires depository institutions to use the daily average balance in a customer’s deposit over each interestcrediting period to determine the customer’s annual percentage yield (APY) for that deposit account. 1 0 011A P Y365???????????????? ?? dbiwhere i = interest earned b = daily average balance d = term in days ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 63 Money and Capital Markets in Cyberspace ? The measurement or calculation of interest rates is a popular subject on many websites. See, for example, ? ? ? ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 64 Chapter Review ? Units of Measurement for Interest Rates and Security Prices ? Definition of Interest Rates ? Basis Points ? Security Prices ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 65 Chapter Review ? Measures of the Rate of Return, or Yield, on a Loan, Security, or other Financial Asset ? Coupon Rate ? Current Yield ? Yield to Maturity ? HoldingPeriod Yield ? YieldAsset Price Relationships ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 5 66 Chapter Review ? Interest Rates Charged or Paid by Institutional Lenders ? Simple Interest Rate ? AddOn Rate of Interest ? Discount Method ? Home Mortgage Interest Rate ? Annual Percentage Rate (APR) ? Compound Interest ? Annual Percentage Yield (APY)