RSM230H1 Lecture Notes - Lecture 4: United States Treasury Security, Discount Window, Cash Flow
Document Summary
Lecture 4 time value of money: different banks have different rates, but in general, rates all increase/decrease at the same time, some have no minimum requirement, some don"t. Slide 5: getting you to deposit your money, pooling all of the customer"s money together and selling them off as mortgages, longer terms have security. If you cash out before the term is up, you will get a penalty --> might not get the rate that they promised. Locking in money for longer period of time, ask for a higher discount rate: want a higher return, you want to pay a lower price and higher discount rate. Investor only cares about the after tax cash flow. Slide 10: assumes that you put money in and don"t take anything out, makes sense if you think about it as putting in a bit of savings every month and not drawing from account until you retire.
