Chapter 3 Interest and Interest Rate 利息与利率

Learning Objectives:

1.To learn the concept of interest and interest rate. To understand the types of interest rate.

2.To grasp two methods of interest calculation: simple interest and compound interest.

3.To understand discounting and the relationship between interest rate and bond price.

4.To learn about the structure of interest rate, including term structure and risk structure.

3.1 Overview of the interest and interest rate

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课堂练习：

问题讨论：

What is Interest and Interest Rate

Interest is a fee, paid on borrowed capital. The fee is compensation to the lender for foregoing other useful investments that could have been made with the loaned money.

利息是对借入资本支付的一种费用。这笔费用是对贷方的补偿，以补偿其先前可用贷款进行的其他有用投资。

The percentage of the principal that is paid as a fee (the interest), over a certain period of time, is called the interest rate which is the cost and basic price of borrowed capital that equates the demand for and supply of funds in the financial markets.

在一定时期内以费用(利息)形式支付的本金的百分比称为利率，利率是借贷资本的成本和基本价格，等于金融市场上资金的需求和供给。

Types of Interest Rate

1.Nominal and real interest rate 名义利率和实际利率

2.Official and market interest rates 官方利率和市场利率

3.Fixed and floating interest rates 固定利率和浮动利率

4.Benchmark rate and financial institutions’ rate 基准利率和金融机构利率

5.General and prime interest rates 一般利率和优惠利率

6.Yearly, monthly and Daily Interest rates 年利率、月利率、日利率

1. Nominal and real interest rate

Nominal interest rate is the promised amount of money you receive per unit you lend. It measures the increment in certain money.

名义利率是你承诺的每单位贷款收入。它衡量的是特定货币的增值。

Real interest rate is the nominal rate you earn corrected for the change in the purchasing power of money or for the expected inflation.

实际利率是经过货币购买力或预期通货膨胀修正后的名义回报率。

2. Official and market interest rates

Official interest rate is the rate set by the central banks or monetary authorities. The interest rate is one of levers used by governments to regulate economy.

官方利率是由中央银行或货币当局制定的利率。利率是政府用来调控经济的杠杆之一。

 Market interest rate is the rate wholly determined by the demand for and supply of funds in the financial markets at certain time.

市场利率指在某一时点完全由金融市场上资金的供给和需求所决定的利率。

The market rate is an indicator of the state of the demand for and supply of funds in the financial markets.

3. Fixed and floating interest rates

Fixed interest rate refers to the interest rate that is not adjusted during the period of financing.

固定利率是指融资期间未调整的利率。

Floating interest rate refers to the interest rate that is not static during the period of financing, but is adjusted according to the changes of market interest rates now and then.

浮动利率在整个融资期间不固定，而是根据市场利率的变化不时进行调整。

Usually, interest rates are adjusted every three or six months according to market interest rates changes.

4. Benchmark rate and financial institutions’ rate

The benchmark rate refers to the rate that leads and affects other interest rates.

基准利率引导并影响其他利率水平。

Financial institutions’ rate is the rate at which commercial banks and other financial institutions do their businesses of taking in deposits and granting loans.

金融机构利率是商业银行和其他金融机构办理吸收存款、发放贷款业务的利率。

Changes of the benchmark rate affect commercial bank’s interest rates, which will further affect other kinds of interest rates in financial markets.

5. General and prime interest rates

General interest rate refers to the interest rate that is charged by banks and other financial institutions according to a general standard when loans are granted and deposit are taken in.

一般利率是指银行和其他金融机构在发放贷款和吸收存款时，按照一般标准收取的利率。

Prime interest rate refers to the interest rate that enjoys preferential conditions and is higher than the general deposit rate and lower than the general lending rate.

优惠利率是指享有优惠条件的利率，其存款利率比一般存款利率高，贷款利率则比一般贷款利率低。

6. Yearly, monthly and Daily Interest rates

Based on maturities, there are three ways to express interest rates, which are the yearly rate, monthly rate, and daily rate.

The yearly interest rate is accounted on the basis of years and is quoted as % of the principal.

年利率是按年计算的，并以本金的%表示

 The monthly interest rate is accounted on the basis of months and is quoted as %0 of the principal.

 The daily interest rate is accounted on the basis of days and is quoted as %00 of the principal. 

Determinants of Interest Rates

1.Social average rate of profit社会平均利润率

2.Demand for and supply of funds资金供求

3.National economic policies国家经济政策

4.Business cycle商业周期

5.Inflation通货膨胀

6.Level of international interest rates国际利率水平

 

Checkpoints:

How to understand interest rate and exchange rate from the point of the financial prices?