Kev

i thought it is the reason of rate of return.% w1 k  n+ J* _* J! z; F7 ?
CDs could have different ratings, AAA -> F,
% D! o3 K( g) w5 v5 p( emore risky ones would have higher premium (interest rate) as a compensation for an investment.
5 W8 W3 M( }% [7 t* Wmain reason why ppl buy those risky CDs is because the rate of return exceeds their internal rate of return,
) N: t' A0 R, G- ?" Xin other words, the interest rate of that investment > their required interest rate, therefore they invest in those securities.
$ q: X" _# M8 u# V) k" JAlso, fund managers would include risky assets in their portfolio for different purposes, eg efficiency.; |/ \; p$ H+ T: t( V
similar to bonds, CDs trading in the secondary market have different value at different times,
( ^* s& Z) b) w! h5 i9 R3 Vnormally the value is calculated by adding it's principle and interest. 6 n( E3 S9 a; @, @
eg. the value of the mortgage+the interests to be recieved in the future. * g" H$ H6 E9 K1 `9 P3 A2 {+ t
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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: i- G6 A% }8 o5 wim not quite sure if the multiplier effect does really matter in this case.
8 e; d- J. n2 _in stock market, it's the demand and supply pushing the price up/downwards.+ `0 a! i$ |$ O; |8 M
For eg, A bought 10000 shares @10$ ; B sells 20000 shares to C @ $12," q( v1 r% c9 B+ b
A's shares would suddenly increase to $120000 from $100000 which does not invlove any $ transaction.
7 E5 U7 ?) N9 ~, @1 r+ Y6 XThe 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 \7 Z% j# G9 M
but the value of their assets did really drop significantly.0 P# S: u3 t; f1 \# ]

3 D; D+ n/ d: c: A8 K6 Y[ 本帖最後由 Kev 於 2008-10-8 07:26 PM 編輯 ]

Kev

原帖由 balachiDavis 於 2008-10-8 04:09 PM 發表 http://www.26fun.com/bbs/images/common/back.gif5 o0 L) `; [" ~  i: d6 F
Refer to last example,7 [, w0 |8 m& Y+ ~
that means bank A have no money because we borrow 10 dollars from bank A % k4 s, m9 A+ C1 n% z1 D/ s1 v  s
Because bank A doesnt have enough cash on hand # a/ c) h  j6 S/ B* v2 w9 C; a6 P
therefore bank A need to be bankrrupt ??? Am I right ?? ...

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. b) s2 ]% y9 B' I/ T" d; I- mA->B->C->D->E0 p4 \, D7 E& E& M
so does it mean if E failed to pay D, * p' d% X6 v; b/ s0 v0 `
all the B,C,D,E have to go bankrupt?
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the multiplier just tell how much money created in a whole economy, : r/ z2 \9 y% G( x
in this case it doesnt really matter how much money is created,
5 f* R; t/ o' A$ k1 F% k; ~* Bit's the problem of the debt itself.
* N# T* o$ Z* {the debt(securities) is bad, faulty, that harmed the whole system.