同济大学：《货币金融学》课程电子教案（课件讲稿）Chapter 4 Interest and Interest Rate

9 同济大学 经济与管理学院 TONGJI UNIVERSITY SCHOOL OF ECONOMICS MANAGEMENT Chapter 4 Interest and Interest Rate 年 整零存 年 存存 三年圆 息五 取 泡乔快网 xkb.com.cn

Chapter 4 Interest and Interest Rate

The Economics of Money and Banking Chapter 4 Interest and Interest Rate 》Agenda ■ Understanding Interest and Interest Rate Determination of Interest Rates and Interest Rate Theory ● ● System of Interest Rate Regulation 2 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 2 GUO YING SEM TONGJI UNIVERSITY  Understanding Interest and Interest Rate  Determination of Interest Rates and Interest Rate Theory  System of Interest Rate Regulation Chapter 4 Interest and Interest Rate Agenda

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >》Interest 1 Definition Interest Rate Understanding Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets.It is most commonly the price paid for the use of borrowed money or money earned by deposited funds. Interest and What is the nature of interest? 3 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 3 GUO YING SEM TONGJI UNIVERSITY 1 Interest What is the nature of interest? Definition Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money or money earned by deposited funds. Interest Rate Understanding Interest and Chapter 4 Interest and Interest Rate

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Western Theory of interest 1 A:Derivation of land rent Interest Rate Understanding Interest and B:Abstinence theory of interest C:Abstinence theory of interest 4 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 4 GUO YING SEM TONGJI UNIVERSITY 1 Western Theory of interest Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and A: Derivation of land rent B: Abstinence theory of interest C: Abstinence theory of interest

The Economics of Money and Banking Chapter 4 Interest and Interest Rate D》》 Western Theory of interest 1 D:Exploitation theory Interest Rate Interest comes from surplus value Understanding Interest and Interest presents a form of price for funds Interest is converted into a general form of income Karl Marx (1818-1883) 5 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 5 GUO YING SEM TONGJI UNIVERSITY 1 Western Theory of interest Interest comes from surplus value Interest presents a form of price for funds Interest is converted into a general form of income Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and Karl Marx (1818-1883) D: Exploitation theory

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Interest Rate 1 Definition Interest Rate Interest rate refers to the ratio of the interest formed during the Understanding Interest and period of borrowing and lending to the principal of the granted loan. 6 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 6 GUO YING SEM TONGJI UNIVERSITY 1 Interest Rate Definition Interest rate refers to the ratio of the interest formed during the period of borrowing and lending to the principal of the granted loan. Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Types of Interest Rates 1 A:Simple and compound interest Interest Rate Simple interest refers to interest earned only on the principal of the Understanding Interest and initial investment. Principal rate time(in years)=interest ▣ Total future amount principal interest principal 1+rate*year) 7 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 7 GUO YING SEM TONGJI UNIVERSITY 1 Types of Interest Rates Simple interest refers to interest earned only on the principal of the initial investment.  Principal * rate * time ( in years) = interest  Total future amount = principal + interest = principal * ( 1+ rate*year) Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and A: Simple and compound interest

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Types of Interest Rates 1 A:Simple and compound interest Interest Rate Compound interest involves earning interest in addition to the interest Understanding Interest and earned on the principal or initial investment Total future amount principal *(1+rate)n 8 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 8 GUO YING SEM TONGJI UNIVERSITY 1 Types of Interest Rates Compound interest involves earning interest in addition to the interest earned on the principal or initial investment  Total future amount = principal * ( 1+ rate) n Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and A: Simple and compound interest

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Types of Interest Rates 1 B:Nominal and real interest rate Interest Rate Understanding Interest rate is corrected for the effects of inflation in order to make a meaningful economic comparison over time ▣r=N-INF Interest and r stands for real rate,N for nominal rate and INF for inflation rate 9 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 9 GUO YING SEM TONGJI UNIVERSITY 1 Types of Interest Rates Interest rate is corrected for the effects of inflation in order to make a meaningful economic comparison over time  r = N – INF r stands for real rate, N for nominal rate and INF for inflation rate Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and B: Nominal and real interest rate

The Economics of Money and Banking Chapter 4 Interest and Interest Rate >>Types of Interest Rates 1 C:Official,pact and market interest rates Interest Rate Official interest rate is the rate set by the central banks or monetary Understanding Interest and authorities ■ Pact interest rate is the rate set by the non-government authorities, such as trade union ■ Market interest rate is the rate wholly determined by the demand for and supply of funds in the financial markets at a certain time. 10 GUO YING SEM TONGJI UNIVERSITY

The Economics of Money and Banking 10 GUO YING SEM TONGJI UNIVERSITY 1 Types of Interest Rates  Official interest rate is the rate set by the central banks or monetary authorities  Pact interest rate is the rate set by the non-government authorities, such as trade union  Market interest rate is the rate wholly determined by the demand for and supply of funds in the financial markets at a certain time. Chapter 4 Interest and Interest Rate Interest Rate Understanding Interest and C: Official , pact and market interest rates