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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.
! Y5 q- q; A, b5 l- G8 F1 \CDs could have different ratings, AAA -> F,: ]/ y% \* K! j
more risky ones would have higher premium (interest rate) as a compensation for an investment.
/ s E o$ O7 {% y+ @& cmain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
$ E$ Q$ _8 D( d! n9 ein other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.9 U6 a& ]" f- _' f
Also, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.5 ]" Y% W! R, h
similar to bonds, CDs trading in the secondary market have different value at different times,
3 ~+ U7 J! s3 W- M' {' Nnormally the value is calculated by adding it's principle and interest. 5 f, a' T' T A
eg. the value of the mortgage+the interests to be recieved in the future. 8 y! J% @# D/ j! Y7 Z
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.
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4 x" F' W4 N+ Rim not quite sure if the multiplier effect does really matter in this case.1 i5 n7 _! f! Z, ]: s4 m( g7 }
in stock market, it's the demand and supply pushing the price up/downwards./ _% u- v- @' B# c4 f# A# e$ C) z
For eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,
/ u3 U1 q& k( V, A5 s2 X4 |A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.
1 C( c! W2 O+ U5 j cThe 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. - w B, o! \, y- K, w
but 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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