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發表於 2008-10-8 07:03 PM
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i thought it is the reason of rate of return.
0 f( o8 c& i" w" @- K- ~, qCDs could have different ratings, AAA -> F,
# ~( w" Q9 d. }( kmore risky ones would have higher premium (interest rate) as a compensation for an investment.
) u3 @3 t& B0 Z4 b v4 Ymain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,5 @; N- `1 p& e- h
in other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.4 G1 Y) v9 M+ \% m- [" ]% U1 y
Also, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.
d& v, c+ d0 F" N5 Csimilar to bonds, CDs trading in the secondary market have different value at different times,0 r. h0 h4 j9 ]% q7 \
normally the value is calculated by adding it's principle and interest.
7 D+ m( N8 Y3 d, P% a3 a8 F+ oeg. the value of the mortgage+the interests to be recieved in the future.
, J' T, @6 v: R+ }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.
( N6 h& c1 j$ m# r2 H. k7 N1 |2 [+ i1 e( Y0 o/ d# I
im not quite sure if the multiplier effect does really matter in this case.
X* m: B# E. p0 }# i: E( cin stock market, it's the demand and supply pushing the price up/downwards.
$ Z6 g1 n5 s% j. z2 l; J. WFor eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,5 p) V6 k0 m3 U# \ K8 t4 N' T
A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.' v& Z0 @9 {* X7 m/ N5 U8 Z$ f
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. 6 `, [% t ?# b& F
but the value of their assets did really drop significantly.
- D/ Q& H j6 y$ K' N2 `: u n2 j, i+ p
[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ] |
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