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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.
: O7 V) Q6 s+ T: f1 vCDs could have different ratings, AAA -> F,: s) U6 Y! U' Z7 u4 z$ e2 E
more risky ones would have higher premium (interest rate) as a compensation for an investment.
( d) f' K* p% K- ?; n9 R! A" Gmain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
& H2 X% E6 K. Fin other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.
, o$ H5 ` S4 oAlso, fund managers would include risky assets in their portfolio for different purposes, eg efficiency. b- ^/ n7 c+ j; ^
similar to bonds, CDs trading in the secondary market have different value at different times,
4 p9 D7 J- }* \7 Fnormally the value is calculated by adding it's principle and interest. " _+ b% U- I5 _" Y, o6 e# |/ u
eg. the value of the mortgage+the interests to be recieved in the future. 8 `( n( h0 x4 V5 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, v* j" L9 z: c; o/ [& F, M
4 b, a7 Y. n- x z! C/ q, lim not quite sure if the multiplier effect does really matter in this case.3 A/ C5 Q0 f+ [1 [
in stock market, it's the demand and supply pushing the price up/downwards.4 K4 Q; i6 N" b0 l' K- c
For eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,
0 S( e( m& c A' |: H) W& oA's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction./ u, x, u0 @7 P# B
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. ( o) z5 R9 @: R1 c
but the value of their assets did really drop significantly.# u6 N4 s; }3 o5 ]* t. h4 w
% ]/ D- o( D3 e2 g9 n5 ?- C
[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ] |
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