__第三章金融市场和净现值.ppt

Chapter Outline 3.1 The Financial Market Economy 3.2 Making Consumption Choices Over Time 3.3 The Competitive Market 3.4 The Basic Principle 3.5 Practicing the Principle 3.6 Illustrating the Investment Decision 3.7 Corporate Investment Decision?Making 3.8 Summary and Conclusions 3.1 The Financial Market Economy Individuals and institutions have different income streams and different intertemporal consumption preferences. Because of this, a market has arisen for money. The price of money is the interest rate. The Financial Market Economy: Example Consider a dentist who earns $200,000 per year and chooses to consume $80,000 per year. He has $120,000 in surplus money to invest. He could loan $30,000 to each of 4 college seniors. They each promise to pay him back with interest after they graduate in one year. The Financial Market Economy: Example Rather than performing the credit analysis 4 times, he could loan the whole $120,000 to a financial intermediary in return for a promise to repay the $120,000 in one year with interest. The intermediary in turn loans $30,000 to each of the 4 college seniors. The Financial Market Economy: Example Financial intermediation can take three forms: Size intermediation In the example above, the bank took a large loan from the dentist and made small loans to the students. Term intermediation Commercial banks finance long-term mortgages with short-term deposits. Risk intermediation Financial intermediaries can tailor the risk characteristics of securities for borrowers and lenders with different degrees of risk tolerance. Market Clearing The job of balancing the supply of and demand for loanable funds is taken by the money market. When the quantity supplied equals the quantity demanded, the market is in equilibrium at the equilibrium price. The price of money is the interest rate. 3.2 Making Consumption Choices over Time An individual can alter his consumption across time periods through borrowing and lending. We can illustrate this