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February 24, 2005
Exchange Rates
Interest Rate Parity
Posted by bparke at 07:25 PM | Comments (0)
February 22, 2005
Tues (no camera!)
Posted by bparke at 09:32 PM | Comments (0)
February 17, 2005
The Term Structure of Interest Rates
Events in the Wall Street Journal compelled us to talk about the term structure of interest rates a little early this semester. We begin with the definition of a forward rate.
The forward rate of 5% turns 103 in 2006 into 108.16 in 2007.
The expectations hypothesis recasts this algebra to state that the current long-term rate is determined by the current short-term rate and the expected future short-term rate. The empirical rates include some component of the spread between short-term and long-term rates that can be identified as a risk premium. One of the risk is, of course, the possibility of higher future short-term rates so disentangling these concepts is difficult.
Posted by bparke at 10:18 PM | Comments (0)
Investing in Education
We used a production possibility frontier to demonstrate two points:
1. Having access to financial markets can cause people to invest more in education than they would without that access.
2. Lowering the interest rate on student loans will encourage even more investment in education.
On Tuesday, 2/22, we also investigated a discrete choice to invest in four years of college, emphasizing the role of growth in incomes. The pictures of this analysis are missing because I forgot my camera. I will fix this at some point.
Posted by bparke at 09:34 PM | Comments (0)
February 15, 2005
Saving for Retirement
Posted by bparke at 10:31 PM | Comments (0)
Intertemporal Substitution
Posted by bparke at 09:30 PM | Comments (0)
February 10, 2005
Stock Pricing
Posted by bparke at 11:27 PM | Comments (0)
Investment
Posted by bparke at 11:23 PM | Comments (0)
February 03, 2005
Mortgages
On 2/3 and 2/8, we discussed mortgages.
Posted by bparke at 11:13 PM | Comments (0)
February 01, 2005
Bonds
Posted by bparke at 11:08 PM | Comments (0)