David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Classical Theory Marginal Efficiency of Capital (MEI) –

Slides:



Advertisements
Similar presentations
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Creative Financing Structures Common Forms of Creative Financing Assumable Loans Advantages:
Advertisements

The Loanable Funds Market. Equilibrium Interest Rate Savers and buyers are matched in markets governed by supply and demand There are many markets, but.
Lesson 10-2 Demand, Supply, and Equilibrium in the Money Market.
Interest Rates in the Classical Model Nominal vs.. Real Interest Rates Real interest rate =Nominal rate - Inflation rate  = r- 
Interest, Rent, and Profit. Interest It is the price for credit or loanable funds. It is also called the return earned by capital as an input in the production.
INDEX What is interest? Types of interest Difference b/w gross & net interest Difference in rates of interest Classical theory and loanable funds [elaboration]
The Market for Loanable Funds Chapter 13. The Market for Loanable Funds Financial markets coordinate the economy’s saving and investment in the market.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rates Base Interest Rate Minimum interest rate Risk Premium Spread Measures:
AP Economics Dictionary
Chapter 7: Savings and Investment
Copyright©2004 South-Western 32 A Macroeconomic Theory of the Open Economy.
DETERMINATION OF INTEREST RATES OBJECTIVES 1. To explain the Loanable Funds Theory of interest rate determination 2. To identify the major factors affecting.
Ch. 7. At Full Employment: The Classical Model
MARKET EQUILIBRIUM Quantity Price Quantity Price.
Supply and Demand in the Space Market
Copyright © 2004 South-Western The Loanable Funds Market Mod 29.
Real Estate Investments David M. Harrison, Ph.D. Texas Tech University  In general, the riskiness of a portfolio (  portfolio ) will -  Systematic vs.
REAL ESTATE MARKETS LEARNING OBJECTIVES Examine the implications of fixed location on the behavior of real estate markets and how firms, households, and.
Copyright © 2006 Thomson Learning 32 A Macroeconomic Theory of the Open Economy.
The Roots of Modern Macroeconomics.
Real Estate Investments David M. Harrison, Ph.D. Texas Tech University Constructing Pro-formas Real Estate I/S Potential Gross Income (PGI) - Vacancy &
Chapter Three: Supply and Demand. The Theory of Supply.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Inflation and Asset Returns Nominal Return - Real Return -  During Inflationary Periods.
The Market for Loanable Funds Supply = Demand. Loanable Funds Demand Curve: Slope Demand for loanable funds, D The loanable funds demand curve is downward.
Economic Rent Determination of Land Rent Loanable Funds Theory of Interest Range of Interest Rates Economic Profit Rent, Interest, and Profit.
Real Estate Investments David M. Harrison, Ph.D. Texas Tech University  Expected Rate of Return -  Example: Risk & Return.
Copyright © 2010 Cengage Learning 32 A Macroeconomic Theory of the Open Economy.
Financial Markets and Institutions PowerPoint Slides for: By Jeff Madura Prepared by David R. Durst The University of Akron.
Quantity of Federal Funds Borrowed and Lent Federal Funds Rate 6 % Supply of Federal Funds Demand for Federal Funds E.
The Loanable Funds Market. Equilibrium Interest Rate Savers and buyers are matched in markets governed by supply and demand There are many markets, but.
Chapter 19 The Demand for Real Money Balances and Market Equilibrium ©2000 South-Western College Publishing.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University “In general, the value of a parcel of real estate is the present value of the expected.
Macroeconomics: Study Guide Tom Porter, Supply and Demand Start with supply and demand –For macroeconomics the starting point is aggregate supply.
Money and Real Economy Money, Bonds, Monetary Policy, GDP 1.
Copyright © 2008 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 23-1 At Full Employment: The Classical Model CHAPTER 23.
DEMAND, SUPPLY, and MARKET EQUILIBRIUM Appendix (chapter 3)
Determination of Interest Rates
Investment and the Employment of Capital. The Pricing of Capital and Capital Services Factor prices versus the price of factor services –factor prices.
Real Estate Investments David M. Harrison, Ph.D. Texas Tech University Real Estate Investment Analysis  What is this course about?  Real –  Estate –
MARKET EQUILIBRIUM.   Market Equilibrium is when the quantity demanded and the quantity supplied at a particular price are EQUAL.   Equilibrium Price.
Do Now: Investment curve handout. Draw a fully labeled graph of a loanable funds market including the savings and investment curves.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Finance Theory and Real Estate Goal – Asset Valuation: Risk vs. Uncertainty.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University The Development of Mortgage Markets 1950’s – A Decade of Stability  Maturity Mismatch???
Copyright © 2011 Cengage Learning 26 Saving, Investment, and the Financial System.
REAL ESTATE FINANCE FIN 3334/5334
Interest Rates 1. Interest Rates and Inflation If the nominal interest rate is 10% and the inflation rate is 15%, how much is the REAL interest rate?
Chapter 1 Overview of Real Estate Finance. Chapter 1 Learning Objectives Understand the relationship between finance and real estate Understand the relationship.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Valuing Collateralized Mortgage Obligations Given the following information about a.
Crowding Out In the Loanable funds Market. Loanable Funds When individuals want to buy houses or businesses want to buy new equipment, they usually borrow.
14 The Federal Reserve and Monetary Policy. money market The market for money in which the amount supplied and the amount demanded meet to determine the.
1 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 8 LOCATION MAKES MARKETS ’INTERESTING, Competitive.
Net Capital Outflow NCO = S - Ig. The market for loanable funds, net capital outflow and the fx market for dollars NCOD S QUANTITY OF DOLLARS D Negative.
14 The Federal Reserve and Monetary Policy. money market The market for money in which the amount supplied and the amount demanded meet to determine the.
THE LEVEL OF INTEREST RATES. 2 What are Interest Rates? Rental price for money. Penalty to borrowers for consuming before earning. Reward to savers for.
Loanable Funds Market Module 29.
The Global Loanable Funds Market
When Recession Strikes, Time to Start Saving
CHAPTER 15 Putting It All Together
Labor Supply and Demand
Market Effects of Changes in Demand or Changes in Supply
A Macroeconomic Theory of the Open Economy
CHAPTER 11 Interest Rates and Why They Change
EQUATION 2.1 Demand Function.
Saving, Investment, and the Financial System
AP ECONOMICS: November 9
The Loanable Funds Market
MARKET EQUILIBRIUM.
Lease and Real Estate Service in Austin, Texas.
Loanable Funds Market Module 29.
Presentation transcript:

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Classical Theory Marginal Efficiency of Capital (MEI) – Supply of Funds –

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Classical Theory (cont.) Market Equilibrium Disequilibrium Conditions

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Limitation of the Classical Theory Loanable Funds Approach –

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Demandors of Funds Suppliers of Funds

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Interest Rate Determination Loanable Funds Examples:

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University The Monetarist View of Interest Rates The Old Quantity Theory The Classical Quantity Theory 

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University The Monetarist View of Interest Rates The Modern Quantity Theory Changes in the Money Supply have 3 effects: 

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Neo-Keynesian Model Interest rates are dependent upon…  Transaction Demand –  Speculative Demand – Examples: Increasing the money supply  Decreasing the money supply 

David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Sources of Risk Risks Associated with Mortgage Investing

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.