Pricing Convertible Bonds using Stochastic Interest Rate
... A convertible bond is a bond that may be converted into stocks. Just like a normal bond it has a face value that will be paid back at the date of maturity. The holder has the right to convert the bond into a predetermined number of shares in the company in a given period of time. The convertible bon ...
... A convertible bond is a bond that may be converted into stocks. Just like a normal bond it has a face value that will be paid back at the date of maturity. The holder has the right to convert the bond into a predetermined number of shares in the company in a given period of time. The convertible bon ...
NBER WORKING PAPERS SERIES GOVERNMENT SOLVENCY, PONZI FINANCE AND THE REDUNDANCY
... 920-0109. "Economics, Politics and Policies of Stabilization, Snctural Adjustment and Long-term Development," administered by the Economic Growth Center of Yale University. This paper is part of NBER's research program in Public Economics. Any opinions expressed are those of the authors and not thos ...
... 920-0109. "Economics, Politics and Policies of Stabilization, Snctural Adjustment and Long-term Development," administered by the Economic Growth Center of Yale University. This paper is part of NBER's research program in Public Economics. Any opinions expressed are those of the authors and not thos ...
Is There Any Tradeoff Between Inflation And Unemployment?
... Myanmar and South Africa) have been used for the period 1980-2010. This paper has found significant results; there is a negative relationship between inflation and unemployment rate in the SAARC Countries. Concept of Phillips curve holds true. ...
... Myanmar and South Africa) have been used for the period 1980-2010. This paper has found significant results; there is a negative relationship between inflation and unemployment rate in the SAARC Countries. Concept of Phillips curve holds true. ...
This PDF is a selection from a published volume from
... level of the interest rate is determined by the level of the capital stock and thus by the level of government debt. The change in the interest rate is affected by the government budget deficit, which is essentially equal to the change in government debt. Empirical estimates of the effect on interes ...
... level of the interest rate is determined by the level of the capital stock and thus by the level of government debt. The change in the interest rate is affected by the government budget deficit, which is essentially equal to the change in government debt. Empirical estimates of the effect on interes ...
test #1 production possibilities / growth / circular flow
... a) businesses pay wages, rent, interest and profits to households in return for use of factors of production b) businesses purchase goods and services from households in return for money payments c) households pay wages, rent, interest, and profits to businesses in return for use of factors of produ ...
... a) businesses pay wages, rent, interest and profits to households in return for use of factors of production b) businesses purchase goods and services from households in return for money payments c) households pay wages, rent, interest, and profits to businesses in return for use of factors of produ ...
Interest Rate Elasticity of Residential Housing Prices
... These studies, however, do not provide clear guidance on the magnitude of the elasticity of residential housing prices with respect to short-term interest rates. Reported elasticities vary widely⎯roughly from zero to minus 8 (Appendix I). In reviewing the studies, we have identified two potential ca ...
... These studies, however, do not provide clear guidance on the magnitude of the elasticity of residential housing prices with respect to short-term interest rates. Reported elasticities vary widely⎯roughly from zero to minus 8 (Appendix I). In reviewing the studies, we have identified two potential ca ...
Introduction to Managerial Accounting
... The payback period is the length of time that it takes for a project to recover its initial cost out of the cash receipts that it generates. When the net annual cash inflow is the same each year, this formula can be used to compute the payback period: ...
... The payback period is the length of time that it takes for a project to recover its initial cost out of the cash receipts that it generates. When the net annual cash inflow is the same each year, this formula can be used to compute the payback period: ...
Conducting Monetary Policy in Turbulent Times
... interest rates sufficiently high at the onset of the crisis. However, as financial conditions across markets deteriorated further and with the apparent long and deep global recession, central banks were forced not only to lower their target rates in aggressive moves, but also to pursue UMP measures ...
... interest rates sufficiently high at the onset of the crisis. However, as financial conditions across markets deteriorated further and with the apparent long and deep global recession, central banks were forced not only to lower their target rates in aggressive moves, but also to pursue UMP measures ...
NBER WORKING PAPER SERIES ON THE OR IRRELEVANCE OF PUBLIC
... be made about the role of the government in redisgeneral. If, behind the veil of ignorance, before individuals knew the endowments with which they were to be born they could sell enforceable Insurance policies to each other, with the payoffs a function of what endowments they were presented with, or ...
... be made about the role of the government in redisgeneral. If, behind the veil of ignorance, before individuals knew the endowments with which they were to be born they could sell enforceable Insurance policies to each other, with the payoffs a function of what endowments they were presented with, or ...
the partisan model of macroeconomic cycles: more
... (which, for lack of a satisfactory alternative, might be viewed as a proxy for a time dependent natural rate) and is driven by changes in aggregate demand.9 The demand policy multiplier term is intentionally not constrained a priori as deviation from expectation, in other words is not written in the ...
... (which, for lack of a satisfactory alternative, might be viewed as a proxy for a time dependent natural rate) and is driven by changes in aggregate demand.9 The demand policy multiplier term is intentionally not constrained a priori as deviation from expectation, in other words is not written in the ...
Inflation, Disinflation, and Deflation
... In Chapter 15, we learned that in the short run an increase in the money supply increases real GDP by lowering the interest rate and stimulating investment spending and consumer spending. However, in the long run, as nominal wages and other sticky prices rise, real GDP falls back to its original lev ...
... In Chapter 15, we learned that in the short run an increase in the money supply increases real GDP by lowering the interest rate and stimulating investment spending and consumer spending. However, in the long run, as nominal wages and other sticky prices rise, real GDP falls back to its original lev ...
The Effect of Government Policy on China`s Stock Market
... Theory. Imagine a scenario when supply increases, people have more to consume. One may consume all or consume partially and invest the rest in order to increase the future consumption. The life cycle saving theory, for example, argues that individuals consume based on expected income ...
... Theory. Imagine a scenario when supply increases, people have more to consume. One may consume all or consume partially and invest the rest in order to increase the future consumption. The life cycle saving theory, for example, argues that individuals consume based on expected income ...
Analogy Based Valuation of Currency Options
... in the behavioral finance literature (see Barberis and Thaler (2002)) is that the absence of “free lunch” does not imply that prices are right due to limits to arbitrage including transaction costs. In our context, the presence of transaction costs is likely to eliminate any “free lunch” at the expe ...
... in the behavioral finance literature (see Barberis and Thaler (2002)) is that the absence of “free lunch” does not imply that prices are right due to limits to arbitrage including transaction costs. In our context, the presence of transaction costs is likely to eliminate any “free lunch” at the expe ...
(Should) Keeps Utility Execs Awake at Night? Sandy Williams, Foley
... relatively low in the short term, has been shown to be much greater over a period measured in several years This has been reflected in conservation effects recognized after the Arab oil embargo of 1973, and then the run up in electric prices tied largely to high inflation rates and the very large nu ...
... relatively low in the short term, has been shown to be much greater over a period measured in several years This has been reflected in conservation effects recognized after the Arab oil embargo of 1973, and then the run up in electric prices tied largely to high inflation rates and the very large nu ...
NBER WORKING PAPER SERIES OPTIMAL SIMPLE AND IMPLEMENTABLE MONETARY AND FISCAL RULES
... of easily observable macroeconomic indicators. Specifically, we study interest-rate feedback rules that respond to measures of inflation and output. We study six different specifications of those rules: backward-looking rules (where the interest rate responds to past inflation and output), contempor ...
... of easily observable macroeconomic indicators. Specifically, we study interest-rate feedback rules that respond to measures of inflation and output. We study six different specifications of those rules: backward-looking rules (where the interest rate responds to past inflation and output), contempor ...
Ch08 - NTU
... – The buyer of a put option, however, wants to be able to sell the underlying currency at the exercise price when the market price of that currency drops – If the spot price drops to $0.575/SF, the buyer of the put will deliver francs to the writer and receive $0.585/SF – At any exchange rate above ...
... – The buyer of a put option, however, wants to be able to sell the underlying currency at the exercise price when the market price of that currency drops – If the spot price drops to $0.575/SF, the buyer of the put will deliver francs to the writer and receive $0.585/SF – At any exchange rate above ...
Understanding the Great Recession ! Lawrence J. Christiano Martin S. Eichenbaum
... participation rate have dropped substantially and show little sign of improving. The unemployment rate has declined from its Great Recession peak. But, this decline primarily reáects a sharp drop in the labor force participation rate, not an improvement in the labor market. Indeed, while vacancies h ...
... participation rate have dropped substantially and show little sign of improving. The unemployment rate has declined from its Great Recession peak. But, this decline primarily reáects a sharp drop in the labor force participation rate, not an improvement in the labor market. Indeed, while vacancies h ...
macroeconomic policy - Faculty of Business and Economics Courses
... First of all, Keynesian Model attempts to explain the determination of Y (GNP) and employment in the short-run in Keynesian Model. Short-run follows from the assumption of price and wage stickiness. In other words, producers do not change prices even when the aggregate demand increases or decreases. ...
... First of all, Keynesian Model attempts to explain the determination of Y (GNP) and employment in the short-run in Keynesian Model. Short-run follows from the assumption of price and wage stickiness. In other words, producers do not change prices even when the aggregate demand increases or decreases. ...
Quantitative Easing in a Small Open Economy: An International
... QE also requires an imperfect substitution between domestic and foreign bonds, either in the shortor long-term markets. In the case where home and foreign bonds are perfect substitutes in both maturities, households can perfectly rebalance their portfolios using foreign bonds to maintain their short ...
... QE also requires an imperfect substitution between domestic and foreign bonds, either in the shortor long-term markets. In the case where home and foreign bonds are perfect substitutes in both maturities, households can perfectly rebalance their portfolios using foreign bonds to maintain their short ...
The Evolution of Economic Understanding and Postwar Stabilization Policy Christina D. Romer
... controls and incomes policies, because they were so pessimistic about the effectiveness of slack in reducing inflation. In contrast, after 1979 policymakers pursued very tight policy because they were convinced that the natural rate of unemployment was relatively high, that slack was necessary to re ...
... controls and incomes policies, because they were so pessimistic about the effectiveness of slack in reducing inflation. In contrast, after 1979 policymakers pursued very tight policy because they were convinced that the natural rate of unemployment was relatively high, that slack was necessary to re ...
chapter 7—long-term debt
... b. This firm has had a rise in the debt, debt/equity, and debt to tangible net worth ratios. The debt to tangible net worth is especially high due to the high amount of excess of cost over fair market value of net assets. The times interest earned figure dropped from a negative 6.51 times in 2009 to ...
... b. This firm has had a rise in the debt, debt/equity, and debt to tangible net worth ratios. The debt to tangible net worth is especially high due to the high amount of excess of cost over fair market value of net assets. The times interest earned figure dropped from a negative 6.51 times in 2009 to ...
Interest rate
An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of principal paid a certain number of times per period for all periods during the total term of the loan or credit. Interest rates are normally expressed as a percentage of the principal for a period of one year, sometimes they are expressed for different periods such as a month or a day. Different interest rates exist parallelly for the same or comparable time periods, depending on the default probability of the borrower, the residual term, the payback currency, and many more determinants of a loan or credit. For example, a company borrows capital from a bank to buy new assets for its business, and in return the lender receives rights on the new assets as collateral and interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower.Interest-rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. The central banks of countries generally tend to reduce interest rates when they wish to increase investment and consumption in the country's economy. However, a low interest rate as a macro-economic policy can be risky and may lead to the creation of an economic bubble, in which large amounts of investments are poured into the real-estate market and stock market. In developed economies, interest-rate adjustments are thus made to keep inflation within a target range for the health of economic activities or cap the interest rate concurrently with economic growth to safeguard economic momentum.