Knowledge points for preparing for the 2020 junior economist's economic foundation: financial instruments and interest rates
(A) the definition and characteristics of financial instruments
Financial instruments, also known as credit instruments, are legally binding creditor-debtor contracts concluded between creditors and debtors, and are written documents listing specific conditions such as loan amount and debt repayment.
Characteristics of financial instruments:
1. Durability. It means that the debtor must pay off the debt within the time limit from the issuance date to the maturity date stipulated in the credit certificate.
2. Liquidity. Refers to the ability of financial instruments to be sold as cash without loss in a very short time. Factors affecting the liquidity of financial instruments: repayment period and debtor's reputation.
3. Risk. Refers to whether the financial instruments held can recover the principal and interest on schedule, especially whether the principal has suffered losses. Risks are divided into two categories: first, the risk of default; The second is market risk.
4. Profitability. Profitability is usually expressed by the rate of return, which refers to the ratio of interest or dividend income obtained from holding financial instruments to prepaid principal. There are three methods to calculate the rate of return: nominal rate of return, current rate of return and actual rate of return (average rate of return).
The relationship among duration, liquidity, risk and profitability is as follows: risk is positively related to duration; Risk is negatively correlated with liquidity; Profitability is positively related to duration and risk, and negatively related to liquidity.
(2) Classification of financial instruments
(Familiar with) Classification of financial instruments: short-term financial instruments, long-term financial instruments and derivative financial instruments.
1. Short-term financial instruments
There are mainly treasury bills, large negotiable certificates of deposit and various bills.
(1) Treasury bonds are generally short-term financial instruments within one year.
(2) Large negotiable certificates of deposit are bearer time deposit certificates issued by banks and other deposit institutions to attract deposits.
(3) Bill: A written contract with a certain format is a creditor's right and debt certificate that stipulates that the debtor unconditionally pays a certain amount on time and can be circulated and transferred. Bills include commercial bills, bank bills, cashier's checks and checks.
(1) Commercial draft. Refers to the bill issued by an enterprise to reflect the relationship between creditor's rights and debts when it delays payment according to the purchase and sale contract.
② Bank draft. The remitter deposits the money in the bank, and the bank issues bills to the remitter for transfer settlement or cash withdrawal in different places.
③ cashier's check. Refers to the bill that the applicant deposits the money in the bank and is issued by the bank to handle the intra-city transfer settlement or withdraw cash.
4 check. It is a bill issued by the depositor of the bank to the payee for settlement or entrusting the bank to pay the money to the payee.
Bank drafts, cashier's checks and checks all belong to bank credit instruments.
2. Long-term financial instruments
Long-term financial instruments mainly refer to all kinds of securities, also known as "securities", which are certificates representing property ownership or creditor's rights. Including long-term government bonds, corporate bonds, bank bonds and stocks.
(1) Long-term national debt. Mainly refers to bonds, bonds are generally medium and long-term financial instruments.
(2) Corporate bonds
(3) Bank bonds
(4) Stock Stock is a written certificate of equity ownership issued by a joint-stock company to investors. Stock is a certificate of ownership, not a certificate of creditor's rights.
3. Derivative financial instruments
(1) Futures and options
Futures trading refers to a transaction in which both parties agree to conduct at an agreed time and at an agreed price and quantity after negotiation. Including currency futures, interest rate futures and stock index futures.
Option trading refers to an agreement that one party has the right to buy or sell an asset at a certain price within a certain period of time, while the other party undertakes the obligation to sell or buy the asset within an agreed period of time. Options have two basic elements: price and time.
(2) Interchange. In a transaction, the exchange of terms, interest rates, currencies, etc. Traders have different needs, such as raising funds or hedging. Including term swap, interest rate swap and currency swap.
(3) Interest and interest rate
1. Definition and calculation of interest rate
Interest rate is the ratio of interest amount to loan principal amount in a certain period, which is called interest rate for short.
The calculation formula is:
Or: interest amount = loan principal amount × term × interest rate.
The calculation of interest involves three factors: principal, term and interest rate. Interest calculation methods include simple interest and compound interest:
(1) Simple interest calculation method
That is, only the original money is used to calculate interest. The sum of principal and interest is Pt=P0×( 1+it).
(2) compound interest method (compound interest)
When each period expires, the interest due will be added to the interest calculation method of the principal.
The formula is: pt = P0× (1+I) t.
2. Types of interest rates
(1) benchmark interest rate: the interest rate that plays a leading role in the interest rate system and can drive and influence other interest rates, also known as the central interest rate, is generally controlled by the monetary authority (central bank) of a country.
(2) According to the management system of interest rate, interest rate can be divided into market interest rate and planned (official) interest rate.
(3) According to whether the interest rate changes during the credit period, interest rates can be divided into fixed interest rates and floating interest rates.
(4) Interest rates can be divided into nominal interest rates and real interest rates according to whether inflation is excluded. Real interest rate = nominal interest rate-inflation rate.
3. Factors affecting the interest rate level
(1) The average profit rate is the basic factor that determines the interest rate level.
(2) the relationship between supply and demand of monetary funds.
③ Inflation rate. The relationship between interest rate and inflation rate;
Real interest rate = nominal interest rate-inflation rate
(4) Historical evolution.
(5) Monetary policy of the central bank.
(6) International financial market interest rates.
4. Nature and function of interest
Interest is the value paid by the borrower to the lender that exceeds the loan principal, that is, the reward of lending funds or the price of using funds.
(1) Nature of interest
Marx believes that interest comes from the surplus value created by hired workers and is a part of surplus value.
(2) the role of interests-the role of value judgment
First, interest is a measure of the actual value of monetary funds in different periods.
Second, interest can improve the efficiency of capital use.