TUGAS MONETER

CHAPTER 4

Disusun Oleh:
Dewi Lucky Aryanti Sinaga (F1119025)
Dewi Setianingsih (F1119026)
Muhammad Inung K (F1119049)

JURUSAN EKONOMI PEMBANGUNAN (TRANSFER)

FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS SEBELAS MARET
SURAKARTA
2020
Summary
CHAPTER 4 Understanding Interest Rate

(Muhammad Inung K. F1119049)

The concept of present value is based on the reality that the money we pay / receive a day this
is more valuable than the same amount of money that we pay / receive in the future. To
calculate the present value, you can use a formula following:

4 Types of Credit Market Instruments

1. Simple loan
An ordinary loan that must be returned within a certain time period with extra interest
2. Fixed-payment loan
Loans for repayment through payment of the same amount in each period
3. Coupon bonds
Paying bond holders with fixed interest payments every year until due date
4. Discount bond
Bond purchase under face value (there is a discount) and face value will be paid on the
due date but there is no interest for payment.
Simple loan and discount bond payments only when the due date, but fixed- payment
loans and coupon bonds payments are periodic until maturity.
(Dewi Setianingsih F1119026)

Yield to Maturity
This concept is one of the most accurate calculations in measuring interest rates.In simple loans
, the simple interest rate is the same as the maturity result.Current bond prices and interest rates
have a negative relationship: when the levelinterest rates go up, bond prices go down and vice
versa.

Yield on A Discount Base

Because yield to maturity is sometimes difficult to calculate, another way to calculate the
interest rate that has often been used in the bond market, namely yield on a discount basis. To
calculate the formula used:

The Distinction Between Interest Rates and Returns

how well someone holds bonds or other securities over a period of time certain measured
accurately with return or better known as the rate of return. Rate of return is defined as payment
to the owner plus changes its value, expressed as a fraction of the purchase price.

(Dewi Lucky Aryanti Sinaga F1119025)

Interest-Rate Risk
Prices and returns for long-term bonds are more volatile compared to short term bonds.
The risk of an asset return caused by changes in interest rates called interest-rate risk .

The Distinction Between Real and Nominal Interest Rates

Nominal interest rates are interest rates that still contain an element of inflation. While real
interest rates are interest rates that have no elements inflation. Real interest rates are more
accurate in reflecting the cost of borrowing
When real interest rates are low, the incentive to borrow is greater thanto lend.

Questions and Problems

(Muhammad Inung K. F1119049)

1. Less. It would be worth 1/(1 = 0.20) = €0.83 when the interest rate is 20%, rather than 1/(1
= 0.10) = €0.91 when the interest rate is 10%.
2. No, because the present discounted value of these payments is necessarily less than €10
million as long as the interest rate is greater than zero.

3. €1,000/(1 = 0.10) = €1,210/(1 = 0.10)2 = €1,331/(1 = 0.10)3 = €3,000

4. The yield to maturity is less than 10 percent. Only if the interest rate was less than 10
percent would the present value of the payments add up to €4,000, which is more than the
€3,000 present value in the previous problem.

5. €2,000 = €100/(1 = i) = €100/(1 = i)2 = . . . = €100/(1 = i)20 = €1,000/(1 = i)20.

Questions and Problems

(Dewi Setianingsih F1119026)

6. 25% = (€1,000 – €800)/€800 = €200/€800 = 0.25.

7. 14.9%, derived as follows: The present value of the €2 million payment five years from

now is €2/(1 = i)5 million, which equals the €1 million loan. Thus 1 = 2/(1 = i)5. Solving

for i, (1 = i)5 = 2, so that i = 1 = 0.149 = 14.9%.

8. If the interest rate were 12 percent, the present discounted value of the payments on the
government loan are necessarily less than the €1,000 loan amount because they do not start
for two years. Thus the yield to maturity must be lower than 12 percent in order for the
present discounted value of these payments to add up to €1,000.
9. If the one-year bond did not have a coupon payment, its yield to maturity would be (€1,000
€800)/ €800 €200/€800 = 0.25 = 25%. Because it does have a coupon payment, its
yield to maturity must be greater than 25%. However, because the current yield is a good
 approximation of the yield to maturity for a twenty-year bond, we know that the yield to
maturity on this bond is approximately 15%. Therefore, the one-year bond has a higher
yield to maturity.
10. The current yield will be a good approximation to the yield to maturity whenever the bond
price is very close to par or when the maturity of the bond is over ten years.

Questions and Problems

(Dewi Lucky Aryanti Sinaga F1119025)

11. We would rather own the Treasury bill, because it has a higher yield to maturity. As the
example in the text indicates, the discount yield’s understatement of the yield to maturity
for a one-year bill is substantial, exceeding one percentage point. Thus the yield to maturity
on the one-year bill would be greater than 9%, the yield to maturity on the one-year
Treasury bond.
12. We would rather be holding long-term bonds because their price would increase more than
the price of the short-termbonds, giving them a higher return.
13. No because if interest rates rise sharply in the future, long-term bonds may suffer such a
sharp fall in price that their return might be quite low, possibly even negative.
14. Simply compute real interest rates (r = i - π) in both periods:
Before r = 5% - 2% = 3%
After r = 10% - 9% = 1%
People are more likely to buy houses now because the real interest rate they have to pay
has fallen from 3% to 1%. People are paying back more in terms of dollars, but the values
of their houses have risen at such a rate that the real cost of financing their homes has
actually fallen.
People are more likely to buy houses because the real interest rate when purchasing a house
has fallen from 3 percent (=5 percent -2 percent) to 1 percent (=10 percent − 9 percent).
The real cost of Fnancing the house is thus lower, even though mortgage rates have risen.
(If the tax deductibility of interest payments is allowed for, then it becomes even more
likely that people will buy houses.)
15. We think the economists was right. They reason that nominal interest rates were below
expected rates of inflation in the late 1970s, making real interest rates negative. The
expected inflation rate, however, fell much faster than nominal interest rates in the mid-
1980s, so nominal interest rates were above the expected inflation rate and real rates
 becamepositive.

Web Exercise no.1,3

(Dewi Setianingsih F1119026)

1. a. Greece is a euro area country which has the highest spread versus bunds. It is +2.98
Latest yield 2.57% and the spread vs T-notes +1.75
b. Switzerland is a euro areal country which has the lowest spread versus bunds. It is -
0.08
Latest yield -0.50% and the spread vs T-notes -1.32

Web Exercise

(Dewi Lucky Aryanti Sinaga F1119025)

2. Imbal hasil obligasi pemerintah utama tersedia di www.bloomberg.com/markets/rates-

bonds.

a) Negara mana saja yang terdaftar saat ini yang memiliki yield obligasi pemerintah 10
tahun tertinggi?
b) Yang memiliki hasil obligasi 10-tahun terendah?
c) Dengan menggunakan 'Kalkulator Spread Obligasi', tentukan spread antara obligasi
pemerintah 10-tahun Italia dan obligasi 10-tahun Jerman.
d) Grafik hasil obligasi pemerintah 10 tahun Jerman
(www.bloomberg.com/quote/GDBR10:IND) selama 12 bulan terakhir. Bagaimana itu
berubah?
e) Sekarang pilih grafik imbal hasil obligasi pemerintah 10-tahun di kawasan euro lainnya
dalam jangka waktu satu tahun. Apakah polanya mirip dengan Jerman?

JAWAB:

a. Hasil obligasi pemerintah 10 tahun tertinggi adalah Negara Brazil sebesar 8.46 %.
b. Hasil obligasi 10 tahun terendah adalah Negara Switzerland sebesar -0.56 %.

c. Penyebaran obligasi pemerintah Italia selama 10 tahun adalah +2,70.

Pada negara Jerman, tidak ada penyebaran obligasi jerman selama 10 tahun

d. Grafik hasil obligasi pemerintah 10 tahun Jerman selama 12 bulan terakhir.

e. Grafik imbal hasil obligasi pemerintah 10 tahun pada kawasan euro.

Web Exercise
(Dewi Setianingsih F1119026)

3. a. The flat yield on a security is the annual amount receivable in interest, expressed as
a percentage of the clean price (i.e. the price excluding gross accrued interest). Yields
can only be calculated for maturities where gilts exist. Hence for dates in the past where
there was no bond longer than 20 years we do not quote a 20-year yield.

b. zero coupon yield is the rate at which an individual cash flow on some future date is
discounted to determine its present value. By definition it is the yield to maturity of a
zero-coupon bond and can be considered as an average of single period rates to that
maturity. Conventional dated stocks with a significant amount in issue and having more
than three months to maturity, plus General Collateral repo rates (at the short end) are
used to estimate these yields; index-linked stocks, irredeemable stocks, double dated
stocks, stocks with embedded options, variable and floating stocks are all excluded.

Web Exercise
(Muhammad Inung F1119049)

4. a. MARKET AND ECONOMIC STATISTICS as of Market Close March 31, 2005,

with 3-month and 12-month changes:
Long term real rate is greater than three month real rate

b. Chart B shows the evolution of two different measures of long-term real interest rates
since January 1999. Ideally, the nominal yield on ten-year government bonds should be
deflated by a measure reflecting expected inflation for the euro area over the coming
ten years. However, no such measure is available on a timely basis. As a rough
approximation, the measure of expected inflation based on the Consensus Economics
inflation forecast was used to deflate euro area nominal ten-year bond yields. In
addition, the chart shows the yield on the ten-year French index-linked bond, which,
although subject to several caveats, offers a more direct measure of the long-term real
interest rate. In March 2001, the two measures stood at around 40 to 60 basis points
above the levels seen at the start of Stage Three of EMU in January 1999, but around
50 to 120 basis points below their peak levels reached in January 2000.

The table below compares the levels of real interest rates in March 2001 with the
average levels over the past two decades. All averages are deflated by annual headline
consumer price inflation. In addition to the euro area, averages for Germany are
included. This is justified by the fact that interest rates in many countries which are now
part of the euro area incorporated premia reflecting exchange rate risk during the period
prior to Monetary Union. By contrast, German interest rates were less affected by this
and may therefore be more comparable with present levels of euro area rates.

The table shows that, in March 2001, the entire range of the three measures of the short-
term real interest rate was below the averages for the 1980s and the 1990s.
5. Obligasi diskon dijual dengan harga rendah dan seluruh pengembaliannya datang dalam
bentuk apresiasi harga. Anda dapat dengan mudah menghitung harga saat ini ikatan
diskon menggunakan kalkulator keuangan di
www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm.

Untuk menghitung nilai-nilai obligasi tabungan, baca instruksi pada halaman dan klik
Memulai’. Isi informasi (Anda tidak perlu mengisi bidang Nomor Seri Obligasi) dan klik
pada perhitungan.

Jawab :

Untuk menjawab soal ini, dengan menggunakan Treasury Direct dan memperhatikan
langkah-langkah yang tertera sehinga diperoleh untuk menghitung nilai obligasi
tabungan pada bulan Maret 2020 diperoleh data sebagai berikut: