Okay here are a few reading assignments. Next semester in Inter II we will be studying liabilities. Students typically do not have a good background on the equity / liab side of the balance sheet. So I am spotlighting a few resources for you. You may want to bookmark some of these for future reference.
The biggest bond management firm in the US is PIMCO. So Managing Director Bill Gross column is a popular read. He brings us up to date on the sub prime mess. He makes the case for FED Funds falling to 3.5%.
Bookmark this site PIMCO Bond Resources
The first entry entitled Everything You Need to Know about Bonds is very well done. This is not like reading sports scores so n doubt you will need to go over it several times. The following sections give much better detail than the finance.yahoo.com site as it is rather brief. Brevity may appeal to you but the explanations are better at PIMCO. For example the section on Mortgage backed securities is very well done. I don't expect you to grasp Credit Default Swaps at this point so stick with the first few sections.
The bond center at yahoo is here. Current rates and market report are on this page. Today's report is that 'bonds were hit like they were attacked by Chuck Norris!' What does that mean? It means prices fell as investors sold bonds. Rates rose. In the left hand column you will see Bond Education. You can click on the various links to go thru Yahoo's bond primer. Shorter, accurate but maybe too brief in spots but still I am trying to highlight different resources for you.
If you want the Reader's Digest version of all this try Franklin Templeton. This is by far the shortest explanation of the three. It goes more into mutual funds since that is what Franklin is selling. This is about as deep as most 'investors' go with their understanding, if in fact they even read this much. Now look at the Franklin page and then contrast it with the PIMCO page. The difference is what you as a financial professional a CPA, CFA Certified Financial Analyst, CTA Certified Technical Analyst or
CFP (a real lightweight compared to the foregoing three in my opinion) are supposed to understand.
I want to increase your understanding of capital markets. Here is an article that illustrates why you need to read and understand such material. FNM slashes dividend and sells preferred stock. Well if they cannot pay the dividend on the common, how are they going to pay it on the preferred? And look at that whopping yield-8.25%, gee why are they having to pay such a high rate? The answer is that they do not have the cash to pay the common dividend (look up FNM stock price on the charts). And they need more capital. To attract it they are having to offer a high yield, and guarantee those buyers they stand before the common holders as to dividend preference.
I am certainly available over the holidays to answer questions and post comments on the blog. WEB CT will go away so you will have to post on the blog itself. This is a great chance to get ready for the semester. Let's get a head start.
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