Kev

i thought it is the reason of rate of return.
! \9 ]) f0 g3 F" [CDs could have different ratings, AAA -> F,
# f7 }3 F& \, _, ~- @: |2 k0 omore risky ones would have higher premium (interest rate) as a compensation for an investment.
# O0 t( ]% S8 omain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
- L" v7 R( S8 H( f3 ^; Yin other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.5 G/ j. U/ t9 B+ Q% w
Also, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.: x# o; {% i; J* T) G; l0 K! s
similar to bonds, CDs trading in the secondary market have different value at different times,4 H& y# E( y( j' L+ k5 w  `! _
normally the value is calculated by adding it's principle and interest.
3 T+ d7 @7 e# \eg. the value of the mortgage+the interests to be recieved in the future. : f3 I1 e' c* q# ?) j
banks who sell the CDs, could enjoy a few benefits like, the present value of cash and passing the risk of holding a debt to another party.$ z( P0 |$ f  X+ H

. ?) x- r. X/ ?' tim not quite sure if the multiplier effect does really matter in this case.
  f4 b: S& D: d3 t  Y4 M$ fin stock market, it's the demand and supply pushing the price up/downwards.
* s, @6 h; j7 f. K" K  wFor eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,* K0 K2 s2 b  a  d
A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.* x. N' w/ w& w. U% d
The capital loss that ppl suffer nowadays, i believe, most of them does not really suffer a real $ lost yet as long as they dont sell their securities.
2 k4 i/ ?$ q& L2 P. ^1 hbut the value of their assets did really drop significantly.
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, _. s, Q6 |, j5 V[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ]

Kev

原帖由 balachiDavis 於 2008-10-8 04:09 PM 發表 http://www.26fun.com/bbs/images/common/back.gif
& o3 ]2 u5 H, Q% |/ YRefer to last example,. r+ H3 r2 q! w$ d
that means bank A have no money because we borrow 10 dollars from bank A " Y( v9 b8 b$ \
Because bank A doesnt have enough cash on hand
- |, K% ^% s* L" F: E) gtherefore bank A need to be bankrrupt ??? Am I right ?? ...

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A->B->C->D->E
5 f) q6 B; A; @/ kso does it mean if E failed to pay D,
" ?1 ^0 K2 @" k0 T/ F) v3 q# fall the B,C,D,E have to go bankrupt?% P, Q; l! _8 P5 L5 ~

8 {# J. ?8 M& ]' f' Z+ T" _) @1 w& x$ i) G7 j
the multiplier just tell how much money created in a whole economy,
1 R/ L2 v/ C) Q: q2 ^3 `# y) Gin this case it doesnt really matter how much money is created, 2 `. X5 Y+ r, R
it's the problem of the debt itself.1 q4 [! P: ?7 J7 x2 C
the debt(securities) is bad, faulty, that harmed the whole system.