Money and Banking: Lecture 9 - Interest Rate Risk

This course covers the nature and functions of money. Topics include a survey of the operation and development of the banking system in the U.S. and an introduction to the monetary policy.
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[@siddharthbansode1369]

excellent teaching and presentation even without animation and graphics stuff. great thanks for this video

[@vladimirvrab2323]

Awesome presentation!

[@RadhikaMeera]

fabulous explanation. so lucid thank you very much for making this !!!!

[@muleyamwiinga3988]

Meteor example was so dark. Loveeeed it!!!!

[@vincentverschuren3242]

very very good presentation

[@vivian5448]

If you hold the bond till matrurity, then there is no interest risk?

[@dosomething3]

24:30 - "bankers sell the mortgage loan" - Isn't this what sparked the 2008 crisis?

[@muhammadzhafranbahaman6401]

Yeap. It was characterized by the bursting of housing prices.

[@SolutionsWithin]

+Assaf Wodeslavsky Nope. Selling a loan is not a problem. They were bundling them into securities investments and selling them. That CAN turn into a problem. (they are two different things). However, the bigger problem was that people were being allowed to borrow against too high of a percent of their income. Then, when house prices went down, the collateral isn't enough for the loan (can lead to foreclosure). Having a large downpayment and not borrowing what would cost more in debt payments than 30 percent of income helps to protect against rising interest rates or decreasing house value. So, the system needs to prevent against the problems. Canada didn't have very many at all of the mortgage backed securities and the restrictions for getting a loan were way tighter. No mortgage crisis.

[@izdatsumcp]

No. The problem was the mortgages were bad, not that they were sold. Imagine you have a business and it's making huge losses. Suppose you sell it and soon after it goes bankrupt. Is the cause of the bankruptcy the selling of the business or the fact that the business was making losses?

[@kepstein8888]

This guy is brilliant at teaching one of the most boring topics ever.