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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.
: X6 h. C. U$ o' iCDs could have different ratings, AAA -> F,1 h& e. d! S' Z$ n
more risky ones would have higher premium (interest rate) as a compensation for an investment.
0 H7 j, C# ~% b) R# i1 P/ p/ nmain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
2 w% E( X) P, Z9 u4 a! G7 b$ w. Lin other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.0 _4 ]# P# K% r
Also, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.0 c4 T" R7 y# k0 T; |- C
similar to bonds, CDs trading in the secondary market have different value at different times,
, f) m9 y- B. z; L$ T& u* Ynormally the value is calculated by adding it's principle and interest.
6 v! y* ^+ v* U& K: N" p% Zeg. the value of the mortgage+the interests to be recieved in the future.
1 l2 _6 o+ Z' I$ `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.
& _ t9 X/ o1 D2 }
, G/ P8 N3 l9 i. jim not quite sure if the multiplier effect does really matter in this case.
) U# O6 V$ o4 ?( Nin stock market, it's the demand and supply pushing the price up/downwards.
" a& P. j& i- {* l- nFor eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,: u# W" G) y& D/ k, F5 G, ]4 o
A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.) t! e4 f, U. F8 M* n7 x
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.
7 P* N" X7 U1 S% U* }5 Ibut the value of their assets did really drop significantly.
& O' |% P, o/ O B/ }9 l& U7 T& L5 a, S) j* Y) H9 T
[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ] |
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