第三章金融市场和净现值

McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-0ChapterOutline3.1TheFinancialMarketEconomy3.2MakingConsumptionChoicesOverTime3.3TheCompetitiveMarket3.4TheBasicPrinciple3.5PracticingthePrinciple3.6IllustratingtheInvestmentDecision3.7CorporateInvestmentDecision-Making3.8SummaryandConclusionsMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-13.1TheFinancialMarketEconomy•Individualsandinstitutionshavedifferentincomestreamsanddifferentintertemporalconsumptionpreferences.•Becauseofthis,amarkethasarisenformoney.Thepriceofmoneyistheinterestrate.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-2TheFinancialMarketEconomy:Example•Consideradentistwhoearns$200,000peryearandchoosestoconsume$80,000peryear.Hehas$120,000insurplusmoneytoinvest.•Hecouldloan$30,000toeachof4collegeseniors.Theyeachpromisetopayhimbackwithinterestaftertheygraduateinoneyear.DentistStudent#1Student#2Student#3Student#4$30,000$30,000$30,000$30,000$30,000×(1+r)$30,000×(1+r)$30,000×(1+r)$30,000×(1+r)McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-3TheFinancialMarketEconomy:Example•Ratherthanperformingthecreditanalysis4times,hecouldloanthewhole$120,000toafinancialintermediaryinreturnforapromisetorepaythe$120,000inoneyearwithinterest.•Theintermediaryinturnloans$30,000toeachofthe4collegeseniors.Student#1Student#2Student#3Student#4$30,000$30,000$30,000Bank$120,000Dentist$30,000$30,000×(1+r)$30,000×(1+r)$30,000×(1+r)$30,000×(1+r)$120,000×(1+r)McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-4TheFinancialMarketEconomy:Example•Financialintermediationcantakethreeforms:–Sizeintermediation•Intheexampleabove,thebanktookalargeloanfromthedentistandmadesmallloanstothestudents.–Termintermediation•Commercialbanksfinancelong-termmortgageswithshort-termdeposits.–Riskintermediation•Financialintermediariescantailortheriskcharacteristicsofsecuritiesforborrowersandlenderswithdifferentdegreesofrisktolerance.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-5MarketClearing•Thejobofbalancingthesupplyofanddemandforloanablefundsistakenbythemoneymarket.•Whenthequantitysuppliedequalsthequantitydemanded,themarketisinequilibriumattheequilibriumprice.•Thepriceofmoneyistheinterestrate.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-63.2MakingConsumptionChoicesoverTime•Anindividualcanalterhisconsumptionacrosstimeperiodsthroughborrowingandlending.•Wecanillustratethisbygraphingconsumptiontodayversusconsumptioninthefuture.•Thisgraphwillshowintertemporalconsumptionopportunities.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-7IntertemporalConsumptionOpportunitySet$0$20,000$40,000$60,000$80,000$100,000$120,000ConsumptiontodayApersonwith$95,000whofacesa10%interestratehasthefollowingopportunityset.Onechoiceavailableistoconsume$40,000now;investtheremaining$55,000;consume$60,000nextyear.1)10.1(000,55$000,60$$0$20,000$40,000$60,000$80,000$100,000$120,000Consumptionatt+1McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-8IntertemporalConsumptionOpportunitySet$0$20,000$40,000$60,000$80,000$100,000$120,000$0$20,000$40,000$60,000$80,000$100,000$120,000ConsumptiontodayConsumptionatt+1Anotherchoiceavailableistoconsume$60,000now;investtheremaining$35,000;consume$38,500nextyear.1)10.1(000,35$500,38$McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-9TakingAdvantageofOurOpportunities$0$20,000$40,000$60,000$80,000$100,000$120,000$0$20,000$40,000$60,000$80,000$100,000$120,000ConsumptiontodayConsumptionatt+1Aperson’spreferenceswilltendtodecidewhereontheopportunitysettheywillchoosetobe.Ms.PatienceMs.ImpatienceMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-10ChangingOurOpportunities$0$20,000$40,000$60,000$80,000$100,000$120,000$0$20,000$40,000$60,000$80,000$100,000$120,000ConsumptiontodayConsumptionatt+1Ariseininterestrateswillmakesavingmoreattractive……andborrowinglessattractive.Consideraninvestorwhohaschosentoconsume$40,000nowandtoconsume$60,000nextyear.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-113.3TheCompetitiveMarket•Inacompetitivemarket:–Tradingiscostless.–Informationaboutborrowingandlendingisavailable–Therearemanytraders;noindividualcanmovemarketprices.•Therecanbeonlyoneequilibriuminterestrateinacompetitivemarket—otherwisearbitrageopportunitieswouldarise.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-123.4TheBasicPrinciple•Thebasicfinancialprincipleofinvestmentdecisionmakingisthis:•Aninvestmentmustbeatleastasdesirableastheopportunitiesavailableinthefinancialmarkets.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.3-133.5PracticingthePrinciple:ALendingExampleConsideraninvestmentopportunitythatcosts$50,000thisyearanprovidesacertaincashflowof$54,000nextyea