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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.
6 }1 I0 S+ T8 }" PCDs could have different ratings, AAA -> F,- o7 i @, E! x$ w; p: X9 V
more risky ones would have higher premium (interest rate) as a compensation for an investment.
( |+ f+ [: `4 q" E) Q9 pmain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,( A9 w, ~& s; i2 E+ H9 l1 h
in other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.
: `3 N! i2 A5 c7 @( O( R# qAlso, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.5 Y, K3 f( N+ {! n; U1 I* A; {3 m
similar to bonds, CDs trading in the secondary market have different value at different times,
* H- p; W8 A2 E7 knormally the value is calculated by adding it's principle and interest.
# y+ F7 s9 G# K* v& i; Veg. the value of the mortgage+the interests to be recieved in the future.
6 J. o% ^0 L/ T5 `* P/ vbanks 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, t/ n# U, S1 n' \( M r: y
5 q: c l! k- x# r, a; m; Mim not quite sure if the multiplier effect does really matter in this case.1 _5 ]- E# }, X1 s4 h
in stock market, it's the demand and supply pushing the price up/downwards.
7 E9 h/ A9 v" cFor eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12,
! _# a) X) C) U* i+ e& fA's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.- [$ R) w) g& o, J+ H! m
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.
9 @/ o0 }$ b- Vbut the value of their assets did really drop significantly.
# |. ~1 l4 y# X& i& z3 R. |4 }! R2 G( y* ?: |6 ^
[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ] |
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