ECON 100B Lecture Notes - Lecture 16: Franco Modigliani, High-Yield Debt, Savings Account
Document Summary
Bond prices and bond yields arbitrage: the expected returns on two assets ust be equal expectations hypothesis: investors care only about the expected returns and do not care about risk. The modern theory of consumption was developed independently in the 1950s by milton. Priedman as the permanent theory of consumption and by franco modigliani as the life cycle theory of consumption. Nancial wealth: the value of checking and saving accounts. Housing wealth: the value of the house owned minus the mortgage due. Human wealth: after-tax labor income over working life. Nonhuman wealth: the sum of nancial wealth and housing wealth. Panel data sets: data sets that show the value of one or more variables for many individuals or many rms over time. Each year, the survey asks people about their income, wage rate, number of hours worked, health, and food consumption.
