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12#
發表於 2008-10-8 07:03 PM
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i thought it is the reason of rate of return., b( `+ |0 H- X9 w. E& a
CDs could have different ratings, AAA -> F,8 w# A) f1 k" i* s6 E6 b9 O
more risky ones would have higher premium (interest rate) as a compensation for an investment.8 }9 X( n# {5 S! }
main reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
" u6 I0 d- s: Y0 K9 W9 Kin other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.
2 i T# y: E" y% i" {Also, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.
W6 i, S" L5 ]similar to bonds, CDs trading in the secondary market have different value at different times,
+ n, K' N% H0 \, Mnormally the value is calculated by adding it's principle and interest.
4 v+ z/ e5 j- o; x( `eg. the value of the mortgage+the interests to be recieved in the future. 5 o" V {3 }( X ]' H
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. x) l4 z7 Q) X3 c$ z G) K
b$ G# P) ]& N1 U, Z. U, ?8 Y
im not quite sure if the multiplier effect does really matter in this case.
m, c1 _; E4 ]* V, |, G/ @in stock market, it's the demand and supply pushing the price up/downwards.
" Z/ r/ {2 O5 k' o4 P$ d9 HFor eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,9 D C8 T; m4 q8 V
A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.
3 f" t4 L$ F0 M$ ]# hThe 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.
4 P# P" ~& p' f) ibut the value of their assets did really drop significantly.
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[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ] |
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