Arbitrage In The Government Bond Market Essay

arbitrage in the government bond market Essay
MGT 409 Case 1: Arbitrage in the Government Market
1.
In 1991, major discrepancies in the prices of multiple long maturity US Treasury bonds seemed to appear in the market. An employee of the firm
Mercer and Associates, Samantha Thompson, thought of a way to exploit this opportunity in order to take advantage of a positive pricing difference by
substituting superior bonds for existing holdings. Thompson created two synthetic bonds that imitated the cash flows of the 8Вј May 00–05 bond; one
for if the bond had been called at the year 2000, and one for if it hadn't been called and was held to its maturity at year 2005.
The first synthetic bond combined noncallable treasury bonds that matured in 2005 with zero coupon treasuries ... Show more content on
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Through similar calculations of the first synthetic bond, she found that she needed 0.0704 units of the 2000 STRIP, and the price of this synthetic bond
was $100.43.
What Thompson found was surprising because both of these synthetic prices were less than the ask price of the 00–05 treasury bond. In normal
markets this shouldn't be the case because the synthetic bond would be worth more to investors since it does not have a redemption right to the
government. In other words, the callable bond should have a lower price than the synthetic noncallable bond.
2.
There are two ways that Thompson could exploit this pricing anomaly that she found. If she already held the 00–05 treasury bond, then she could
immediately capitalize on the price discrepancy by selling the 00–05 treasury bond for the bid price of $101.125 and buying one of these synthetic
bonds. Whether to buy the 2000 synthetic bond or 2005 synthetic bond is up for debate and opinion but it might be suggested to go with the 2005
one since the price of $98.78 is even smaller than the price of $100.43 and there would be larger price impact. By selling the 00–05 bond and buying
the 2005 treasury bond, she would be getting the same cash flows for an immediate lower price.
The second way that Thompson could exploit this pricing anomaly would be if
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Canadian Corporate Bonds
Corporate Bonds are the financial instruments through which corporates can raise capital by borrowing money from investors. In return company pays
interest on the principal. And the principal is returned to the lender after pre–determine period also called as maturity. It is more cost effective to raise
money through bonds than through equity. Even if the company is going through a difficult financial crisis, it still has a legal commitment to pay
interest and principal to lenders. Bond investors have priority over shareholders on the company's properties in case of bankruptcy. Companies issue
bonds for a variety of purposes, including buying new assets, investing in research and development, refinancing debt, or financing mergers and
acquisitions. Corporate bonds are one of the main products of the fixed income market. These instruments have similar features that of a bank loan,
except that they can be transferrable from one lender (investor) to another, and can be traded in market which is known as corporate bond market.
Trading is performed either on price or yield basis. Bond usually trades either at premium or at discount to its face value. The quality of the bond is
derived from creditworthiness of the company or default risk. Based on potential default risk, bonds are evaluated on credit rating ... Show more content
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Due to proximity and easy of accessibility, US corporate bonds are the biggest competitors to Canadian corporate bond market. Due to domestic
operation and high yield, it is cheaper for many corporate issuers to issue bonds in Canada. But because of small size of market in Canada, it is very
difficult for Canadian corporations to distribute economical large issuance in domestic market as compared to US market. Usually Canadian
corporation issues less than $250 million issuance in Canada. For absorption of more than $300 million issuance, these corporations usually rush to

Notes On The And Corporate Bond Market
Apple Bonds in Switzerland
Introduction
In February 2015, Apple Inc. has completed the first issuing of bonds denominated in Swiss Franc. Apple Inc. has successfully raised 1.25 billion
Swiss Francs (USD$1.35 billion) from the sale. There were two parts of bond which were 875 million Swiss Francs bond due to mature in November
2024 with coupon rate of 0.375% and a 375 million Swiss Francs 15–year bond with coupon rate of 0.75%. Due to the negative of Switzerland's
government debt yield, Apple Inc. has taken a lot of advantages from the market. Discussion
Bonds are long–term debts that are issued by government and corporations with financing requirements. In corporate bond market, which is the largest
source of capital for the companies, bonds are all issued by corporations. The bond market has contributed to the direct debt financing and price
discovery. The corporate bond market is constituted with the primary market (issuing) and secondary market (trading). The trading in corporate bonds
helps to reveal the credit risk premium. In corporate bond market, the risk is considered to be higher than the government bond and as a result always a
higher interest rate. Rating of these corporate bonds range from AAA to unrated can help investor to make their decisions. But in general, most of them
have an investment–grade () rating. The apple Swiss francs–denominated bond was rated at AA+ (by S&P), which was only one notch under the
highest AAA rating. Because Apple Inc. has a

Introduction of Malaysia Bond Market
INTRODUCTION
1.1 WHAT IS BOND?
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a
debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the
maturity. Interest is usually payable at fixed intervals (semi–annual, annual, and sometimes monthly). Very often thebond is negotiable, i.e. the
ownership of the instrument can be transferred in the secondary market.
Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is
the interest. Bonds provide the ... Show more content on Helpwriting.net ...
More importantly, Malaysia, among the key Islamic financial centres, offers a wide variety of Islamic bonds that are based on Shariah compliant
concept. As at end–Dec 2010, Islamic bonds accounted for 39% of total bond outstanding.
1.3 BOND MARKET DEVELOPMENT IN MALAYSIA * With the shift in public policy in the 1980s to consolidate public sector activities and
promote the private sector as the engine of growth, a new financing pattern emerged. With this transformation of the economy, the decline of public
sector borrowing was compensated by an increase in financing by the private sector. The private sector has relied on the banking system for its
financing needs, of which a large portion was intermediated through the banking system – the ratio of bank credit to gross domestic product (GDP) in
Malaysia was high at 149% in 1997. Nevertheless, the ratio of bank deposits to GDP was also high at 154% and therefore banks were able to finance
their lending operations from their deposits. * As the banking sector was heavily exposed to the economic crisis that struck the nation in 1997, it was
very cautious in extending new credits. In the post–crisis period, loan growth was low; for example in 1998 and 1999, growth was less than the target
of 8% proposed by the government. * The malignancy of the Asian financial turmoil was derived from the externally–driven currency crisis with the
internally induced banking crisis. In other

Prada: to Ipo or Not to Ipo: That Is the Question, Again
The 15th
Financial Case Analysis Contest
Analysis Report
Case NameпјљPRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN
Report TitleпјљSWEET ARE THE USES OF IPO
Team NameпјљWINDTRACKER
DATE: 16/12/2012 Contents
ABSTRACT1
1.Macro and Industry Analysis3
1.1Financing Environment3
1.1.1International Monetary Market3
1.1.2International Bond Market7
1.1.3International Stock Market9
1.1.4International Private Equity Market10
1.2Industry Analysis10
1.2.1Industry Life Cycle Analysis11
1.2.2Five Forces Analysis13
2.Financial Analysis and Forecasting20
2.1Financial Analysis20
2.1.1Profitability Analysis20
2.1.2Debt Solvency Analysis24
2.1.3A Close Look at Prada's Cash ... Show more content on Helpwriting.net ...
Finally, conclusions are drawn to summarize the whole report to demonstrate you our major points.

1.Macro and Industry Analysis
1.1Financing Environment
Combined with the background given in the case, we believe that before Prada intentionally spread its financing strategy which is fit with its financial
status, the international macroeconomic environment investigation is necessary. Prada, a long history Italian enterprise, has the most direct and
convenient financing channels through the European finance market. In addition, the active American market and strong Asia Pacific market also shall
be taken into account.
Based on the above background, we looked up a large number of the 2010 international financial market data from the People's Bank of China Journal
and Chinese Social Science Financial Statistics Database, and intercepted four quarters of the international financial market operation data and analysis
in 2010. We try to select the best financing channels from the point of view of Prada according to these data.
In the following analysis, we will show four aspects of the 2010 international macro financial markets from the international monetary market,
international debt market, international stock market and international private equity market.
1.1.1

Notes On Bonds And Bonds
Chapter One
Bond Basics
What are bonds?
Bonds are investment tools in form of a debt. When the government, corporate bodies, or municipalities want to borrow from the public, they issue
bonds. By investing in bonds, you are simply lending your money to the issuer of the bond (government or a corporation) at an interest for a given
period of time. Usually bonds have a face value, which is the money being borrowed, the coupon rate which is the interest rate to be paid to the
investors and the maturity date, which is the date you get paid the money you invested. Bonds are issued for varying period of time, may be three
months, one year or even five years.
When an organization issues a bond, it makes a commitment to you (investor) that it will make regular (quarterly, biannually, or yearly) payment of the
interest at a specified rate on the total amount it borrowed from you (face amount) until the maturity date of the bond when it will repay the principal.
This simply means that when you invest in bonds you start earning interest regularly until the maturity date of the bond when the issuer of the bond
pays back the principle (money borrowed). Because of the facts that you get paid interest regularly and the principle upon the maturity of the bond, this
investment instrument is often termed as a fixed income security.
Bonds alongside other investment vehicles such as term deposits and cash are often classified together as income assets because they provide a
reliable and

Green Bond Market : The Rise Of The Green Bond Market
The most recent State of the Market Report on bonds and climate change found that from 2015 to 2016, the so–called "climate–aligned bond universe"
grew by $201 billion to reach a total $895 billion of both labelled and un–labelled green bonds. Separating out the labelled green bond market (as
defined by the Climate Bonds Initiative), there was an increase of close to 100% with issuances totaling $81.4 billion. It has been noted that despite
this overall growth in the green bond market, the growth rate is still far lower than expected and insufficient if we want to achieve our climate targets. I
believe these numbers – along with additional evidence – suggest that the acceleration of the green bond market is simultaneously facilitated and...
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This can move issuers toward a standard for information disclosure, but notably the GBP does not give specific guidance on defining what is green
nor does it issue guidelines for assessing greenness. Additionally, the disclosure of information does not necessarily make it any easier for investors
to analyze green bonds as performing due diligence would still require a significant amount of time and effort. The overall strengths of the GBP are in
helping to harmonize guidelines and standards for proceeds disclosure and allowing issuers to self–label green bonds with minimal additional costs and
burdens. In this way, the GBP can speed up the growth of the green bond market by lowering the barrier for issuers to supply labelled green bonds and
improving investor access to information that can be compared or analyzed. As mentioned above, the GBP recommends that issuers seek independent
assurance from second–party opinions or third–party certification. Second party opinions can be provided by consulting firms like Deloitte,
Sustainalytics, and KPMG or by expert organizations such as CICERO. These audits can contribute to greater investor confidence in the greenness of
such externally–labelled green bonds compared to a self–labelled bond. However, the obvious trade–off is that hiring a second–party to perform this
audit results in an additional cost to the issuer. The use of different

Stop Buying US Treasury Bonds
Among the concerns that were raised during a hearing in Congress was the possibility that foreign governments would stop buying U.S. Treasury
bonds, a practice used by governments to prevent their currencies from appreciating against the U.S. dollar. Use the model of supply and demand to
describe the Treasury bond market and to predict the direction of quantity and price in this case.
Prediction of quantity and price of Treasury bond For determining the quantity and price equilibrium for U.S. Treasury bonds, we will chart the
supply and demand curve to find the equilibrium price of the supply and demand. The general law of supply and demand is when there is a high
demand for something that is of a low supply, than the price and value of that supply will increase. If there is a low demand for something that there is
a high supply of, the price and value of that supply with decrease (Rittenberg, Tregarthen, 2009). ... Show more content on Helpwriting.net ...
market of treasure securities is in the trillions. They have trillions of dollars worth of bonds written to lenders. The majority of these lenders are
foreigners. Although considered an extremely safe "no risk" investment because the Government backs it, a countries currency can be reset and
revalued to the global market. The purchasing of a bond is essentially someone lending money to the government for a period of time in which in
return a secured small gain is realized and paid out. There is a low interest rate that is cumulated of the years, earned and repaid back to the lender.
These security notes and bonds can be traded and bought to and from each other. There is a huge amount of volume of bonds that are traded

Work Help
The future value of an investment will increase when вЂЁ
| | |the number of years increases. |
| | |the interest rate increases. |
| | |both a and b. |
| | |none of above. |
Question 2
When the compounding frequency increases (interest is paid more often), the future value of the investment will вЂЁ
| | |increase. |
| | ... Show more content on Helpwriting.net ...
|
| | |the company's inventory is somewhat obsolete. |
| | |the company's inventory is more liquid. |
| | |the company's sales are higher. |
Question 9 The current ratio of a firm would equal its quick ratio whenever: вЂЁ
| | |the firm has negative liquidity. |
| | |the firm has zero debt. |
| | |the firm has zero inventory. |
| | |the ratios are calculated in such a way that they can never be equal. |
Question 10 Rollin's Corporation has a before– tax cost of debt of 12%, its beta is 1.2, the risk– free rate is 10 percent, and the market return is 15
percent. The marginal tax rate of the company is 40%. What is the cost of debt for Rollin's

The Key Role Of The Commercial Rating Agencies
The pivotal role that the three large US credit rating agencies Moody's, Standard & Poor's (S&P) and Fitch played in the recent subprime mortgage
lending and the following financial crisis has led to extended regulation of these agencies and requires significantly more regulation. Credit rating
agencies and the ratings they supply are critical information resource for investors. An error in the credit rating process has a huge impact on buyers
and sellers of credit. It also affects the overall performance of the financial markets.
Oligopoly of the credit rating agencies
The rating industry is known as an oligopoly, because there are only three significant credit agencies in the US – Moody's, Standard & Poor's (S&P)
and Fitch. In an industry run by oligopoly, perfect competition does not exist. Because each company has a large market share, they are said to have
market power, a situation where one or more of the participants is able to set the price or other outcomes in some general or specialized market. The
oligopolists have the ability to dictate the market. In oligopolistic market one company may fear that if the other company rises price, rivals will
refuse to reciprocate and will take a substantial amount of its customers, leading to the firm's large drop in sales. Since the transactors in bond markets
are mostly institutional bond managers, financial institutions should have the ability to receive the bond creditworthiness information from a broader
range of

Worldcom, Inc Corporate Bond Issuance Essay
WORLDCOM, INC: CORPORATE BOND ISSUANCE
Introduction
This case raises many interesting questions concerning the record setting issuance of corporate debt by WorldCom, Inc. ("WorldCom"). Both the
surprisingly voluminous structure of the proposed issuance and the foreboding macro–economic climate in which it was slated spark concerns over the
risk and cost of the move. One of the first questions that must be addressed is whether WorldCom's timing was appropriate. Next, the company's choice
of structure for the bond issuance must be analyzed. Finally, the cost of issuing each tranche of debt must be estimated in order to determine how much
WorldCom is actually giving up to achieve the $6 billion in funds.
Timing of the Bond ... Show more content on Helpwriting.net ...
In addition, WorldCom was not the only company issuing a large supply ofbonds at that time. In fact, there were many issues set to hit the market
around the same time. The sudden influx of corporate debt into the market would apply pressure on the price of the bonds while granting investors a
wide range of opportunity and control. In addition, the economic turmoil in Asia at the time had caused a great deal of uncertainty about the future of
the fixed–income market and the overall economy, thus pushing investors towards default–free treasury securities and away from corporate debt.
Structure of the Issuance
WorldCom has the option to extend its bank loan credit facility or to issue this large $6 billion in debt. It plans to use the rolling commercial paper
program to pay British Telecommunications for MCI's share purchases, and then use bond proceeds to pay off the commercial paper program. This
signals that WorldCom does not need the money immediately for a single corporate purpose, and does not need the money immediately. Therefore,
perhaps it makes sense for WorldCom to issue the bonds in smaller installments rather than flooding the market with $6 billion in debt all at once. The
first reason for this is that, if an underwriter must first purchase the bonds before selling to investors, an underwriter may demand greater spread in
order to justify taking down an entire $6 billion in debt using the bank's capital assets. The second

Essay on US Bond Market
You have been asked to write a training document about the US Bond Market for use in the new employee–training program. In your document, you
must make sure to address each of the following:
1a: The key players in the market; and the types of investments available to both individual investors and institutional investors,
Bond Characteristics
A bond is a "security" which gives the holder a financial claim on the issuer. This claim protects the holder in circumstances in which the issuer is
unable to pay the amount due. It is made formal by the "trust indenture", a legal document, which specifies all of the bond's features and the legal rights
and obligations of all the parties to the agreement (http://www.finpipe.com/bndchar.htm).... Show more content on Helpwriting.net ...
For further discussion on the main types of bonds, click on the links below: Asset–Backed Securities Convertible Bonds Corporate Bonds Eurobonds
Extendible/Retractable Bonds Foreign Currency Bonds Government Bonds High Yield or "Junk" Bonds Inflation–Linked Bonds U.S. Treasury
Inflation–Protected Securities (TIPS) Mortgage–Backed Securities Zero Coupon or "Strip" Bonds
1b. The way transactions are carried out,
The above links address some of these issues. In other words, the bond market is a market in which the bonds of corporations and governments are
traded (i.e., banks, etc.) and transacted in various settings (i.e., banks, private sectors, government agencies) and in various ways (i.e, over the counter,
electronically, telephone, etc.) www.econ100.com/eu5e/open/glossary.html.
In fact, bond investments are carried out in several ways, depending on the type of bond:
The bond market is any place where newly issued and existing bonds are bought and sold, usually before maturity, by investors looking for income.
This market can be a physical trading area (banks, public sector, etc.), but more often the bonds are traded electronically by investors using computers
and telephone communications www.state.il.us/treas/Education/Glossary.htm. In general, in the bond market, however, trades bonds are also issued
by corporation and government. В•Companies can

The Yield Spread Of A Corporate Bond And A Comparable...
2. Literature review
The yield spread is defined as the difference between the yield on a corporate bond and a comparable government bond. Prior to a study done by
Merton (1974) yield spreads were considered to be mainly driven by expected default losses on corporate bonds, tax premiums and risk premiums
(Radier et al, 2015). However, Merton (1974) and more recent research has shown that factors such as equity volatility, liquidity, interest rate levels and
the slope of the treasury term structure are also significant factors in determining changes in the yield spread (Radier et al, 2013; Lepone & Wong,
2009; Peter & Grandes, 2007; Collin–Dufresne, Goldstein & Martin, 2001).
2.1 Equity Volatility
One of the three factors which Merton (1974) found to be a significant determinant of the yield spread was the probability of default as indicated by the
firm–specific equity volatility on the stock market. Merton (1974) predicted a positive relationship between equity volatility and the yield spread.
According to Merton (1974), a short put option on the equity of a company is equivalent to a corporate bond issued by that company. This means that
any individual corporate bond yield should have a positive relationship with the equity value of the firm (Jubinski & Lipton, 2012).
Radier et al (2015); Hibbert et al (2011); Campbell & Taksler (2004) all find evidence supporting Merton (1974)'s prediction of a positive relationship.
Radier et al (2015) is the only one of these studies

Medical Technology Company Finance Case Essay
1. What specific items of capital should be included in the SIVMED's WACC? Should before–tax or after–tax values be included? Should historical or
new values be used? Why?
Answer: WACC covers computation of SIVMED's cost of capital in which each category of capital is proportionately weighted. All capital basis–
common stock, preferred stock, bonds or any other long–term borrowings – should be listed under SIVMED's WACC. We determine WACC by
multiplying the cost of the corresponding capital component by its proportional weight and then adding: where: Re is a cost of equity Rd is a cost
of debt E is a market value of the firm's equity D is a market value of the firm's debt V equals E + D E/V is a proportion of financing that is equity ...
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Should flotation costs be included in the component cost of debt calculation? Flotation costs are typically included in the component of debt
calculation as a part of calculating the nominal rate of the debt' cost. The costs related to the process of getting new securities. Flotation costs cover
both the underwriting spread and the costs paid by the issuing company from the offering. Shown as a portion of gross proceeds, costs usually rise as
risks associated with the issue rise, or the size of the offering decreases.
c. Should the nominal cost of Debt or the effective annual rate be used? Since the bond pays a coupon semi–annually, and earns 4.75% in six months, it
is possible to determine the effective annual rate (EAR), which we have successfully calculated above. EAR = 6.6% Nevertheless, nominal rates are
typically used for the cost of debt, because total costs of issuance and sale of securities decrease the net proceeds from the sale. These costs are
naturally small on public debt issues.
d. How valid in an estimate of the cost of debt based on 15 year bonds if the corporation normally issue 30 year long term debt? The estimate is not
exactly valid because coupon rates differ for 15– and 30–year bonds. Generally, the cost of debt is higher for bonds with longer time to maturity. It has
to do with risk. The longer

Chap009
Chapter 9
Long–Term Liabilities
Compare financing alternatives (LO1)
E9–1 Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $80 million gaming center:
a.Issue $80 million of 5% bonds at face amount.
b.Issue 2 million additional shares of common stock for $40 per share.
Issue Bonds
Issue Stock
Operating income
$12,000,000
$12,000,000
Interest expense (bonds only)
Income before tax
Income tax expense (35%)
Net income
$___________
$___________
Number of shares 2,000,000 4,000,000
Earnings per share (Net income/# of shares)
$

$
Required:
1. ... Show more content on Helpwriting.net ...
2.Record the bond issue on January 1, 2012, and the first two semi–annual interest payments on June 30, 2012, and December 31, 2012.
Record bonds issued at a premium (LO4)
E9–7 On January 1, 2012, Splash City issues $500,000 of 7% bonds, due in 10 years, with interest payable semi–annually on June 30 and December 31
each year.
Required:
Assuming the market interest rate on the issue date is 6%, the bonds will issue at $537,194.
1.Complete the first three rows of an amortization table.
2.Record the bond issue on January 1, 2012, and the first two semi–annual interest payments on June 30, 2012, and December 31, 2012.
Record bonds issued at face amount (LO4)
E9–8 On January 1, 2012, White Water issues $200,000 of 7% bonds, due in 10 years, with interest payable semi–annually on June 30 and December
31 each year.
Required:
Assuming the market interest rate on the issue date is 7%, the bonds will issue at $200,000. Record the bond issue on January 1, 2012, and the first
two semi–annual interest payments on June 30, 2012, and December 31, 2012.
Record bonds issued at a discount (LO4)
E9–9 On January 1, 2012, White Water issues $200,000 of 7% bonds, due in 10 years, with interest payable semi–annually on June 30 and December
31 each year.
Required:
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $186,410.
1.Complete the first three rows of an amortization table.
2.Record the bond issue on January 1,

The Financial Crisis Of Australian Bonds
Prior to the crisis, the market comprised mainly bonds issued by the Australian banks and assetвЂ‘backed securities. Together these accounted for just
over half of the outstanding stock of Australian bonds in June 2007. Bonds issued by the public sector were a relatively small share of the market, at
16 per cent of the total outstanding
Overall, the size of the bond market in mid–2007 was equivalent to around 84 per cent of Australia 's annual GDP. In the subsequent seven years the
stock of Australian bonds on issue has increased to reach the equivalent of nearly 100 per cent of GDP. The increase has mainly been the result of debt
issuance by the Commonwealth and state governments to finance their budget deficits as they sought to support ... Show more content on
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Discuss the implications of this changing market for other vested parties in the Australian bond market, namely for:
Central Government;
This changing market has had numerous implications for a various number of parties such as central and state governments, Australian corporates and
fixed interest fund managers. The evolution of the Australian bond market over the past several years has been shaped to a large extent by the fallout
from the global financial crisis.
The Australian central government has been affected by this changing bond market as shown through the substantial rise in the market share of
commonwealth government securities (CGS). However, the collective stock of CGS and semi–government bonds have fluctuated representing 40% of
GDP in the first half of the 1990s, then falling to under 15% of GDP by 2005 and finally regaining to approximately the 40% level by 2016/17. The
vast majority of the post–crisis CGS issuance has been purchased by non–residents attracted to the Australian Government 's AAA credit rating and
favourable level of yields relative to other highly rated sovereign issuers. As a result of non–resident investors, segments of the Australian bond market
were altered with over 60% of the CGS market being controlled by non–residents at the end of 2013. Other implications resulted such as the tendency
for yields to follow developments in global markets. While the strong historical

The Impact Of Bond Market On European Government Debt...
2. The Impact of Bond Market on European Government Debt Problems
2.1. Bond Market
The bond market is one of the fixed–income markets that it is deals in with transaction of long term fixed–income securities. Moreover, the bond is one
of the financial instruments and then the financial instruments are generally regarded as securities. In the bond market, there are two bonds familiar to
mass investors. One is called government bonds, and another one is called corporate bonds. Firstly, as its name, government bonds are issued by
government with maturities up to about 30 years. Usually, medium term bonds and long term bonds pay out fixed amounts of coupon payments in
semi–annually during the repayment period. But, the index–linked bonds pay out alterable amounts of coupon payments in semi–annually because of
the changes in inflation. The reason of government bonds are always have a lot of attraction to investors is that investors are generally referred to
government bonds as bonds being free from default risk. With this characteristic, government bonds are safer than most other financial instruments to
invest. However, the high return always with the high risk and vice versa that government bonds offers lower yields. Secondly, the corporate bonds is
the another one that are concerned more by investors in daily transaction activities. There are three main sources for corporates to raising finance for
their investment projects, they are: retained earnings, non–marketable debt

Debt Vs Decedent
"Debts due by the decedent" cannot constitute debts that have accrued after the decedent has passed away. First, this conclusion is reached by a textual,
plain–meaning, reading of the bond. Indeed, at the time of the decedent's death, the decedent ceases to exist, and all that remains is the decedent's
estate. As such, any debts that arise after the decedent's death are not "debts due by the decedent," but they are debts incurred by the decedent's estate.
This is so notwithstanding the fact that the State of Maryland is within the class of entities that that a nominal bond secures. Stated differently, although
the nominal bond secures the decedent's debts to the State, the bond does not secure debts to the state that accrewed after the decedent's ... Show more
content on Helpwriting.net ...
In support, the State will rely on the text of the bond which provides that the surety is "obligated to the State of Maryland." Moreover, the State will
note that in Williamson, two other debts–one for the decedent's credit card, and another for unpaid hospital bills–were properly recoverable against the
bond. Id. at 154. These distinctions are immaterial. The issue in this matter is not to whom particular debts are owed, but rather, when the debts
accrued. Although Williamson, is mandatory authority for the resolution of this issue, the Court ofAppeal's holding in that case embodies a border
concept of the workings of suretyship law that require this outcome.
3.Principles of Suretyship Require That Erie Cannot Be Liable for The State's Claim.
Not only does Williamson, expressly provide that debts incurred after a decedent's death cannot be secured by a nominal personal representative's
bond, but elementary principles of suretyship prohibit a principal obligor and a creditor from unilaterally increasing a surety's exposure to liability on a
bond. Indeed:
[A] change in the agreement by the principal and the obligee, without notice or consent by the surety, when it materially changes the risk, entitles the
surety to discharge, acknowledging that, when it is applicable, there is ample authority to support it. See Restatement (Third) of Suretyship &
Guaranty (1995) В§ 41, which, as pertinent,

What Fundamentals Affect the Yield of Bonds in the...
Whatfundamentalsaffecttheyieldofbonds(Singaporemarket)By:G8LeeKangWeeOliviaTanDaryle–ВвЂђalexisTanHoGuomingFIIMFNCE102ProfessorHua
... Show more content on Helpwriting.net ...
Inflation,RealInterest&BondYieldBondYieldBreakdownbyCountryofRisk(RefertoAppendixA)Majorityofthebondsonthemarketareissuedbycompaniesbased

Financial: Bond and Money Market
Chapter 9
Question #1
What characteristics define the money market? –Money market securities are short–term instruments with an original maturity of less than one year.
These securities include Treasury Bills, commercial paper, federal funds, repurchase agreements, negotiable certificates of deposit, banker's
acceptances, and Eurodollars. Money market securities are used to "warehouse" funds until needed. The returns earned on these investments are low
due to their low risk and high liquidity.
Question #7
Why do businesses use the money market? –Money markets are useful from a business standpoint because they provide banks with readily disposable
income to loan to businesses that need an inflow of cash over a short amount of ... Show more content on Helpwriting.net ...
Another category, sovereign bonds is generally sold by auction to a specialized class of dealers.
Chapter 11
Question #2
Identify the cash flows available to an investor in stock. How reliably can these cash flows be estimated? Compare the problem of estimating stock cash
flows to estimating bond cash flows. Which security would you predict to be more volatile? –Stock market investors can make money in two distinct
ways. First, they profit when the share price of the stock goes up by selling that appreciated stock and realizing their gain. Second, stock market
investors can enjoy a cash flow the dividends paid by stocks. Investors who are interested in this second benefit of stock ownership need to evaluate
potential investments carefully in order to find the ones with the strongest and most secure cash flow.
Question #5
What distinguishes stocks from bonds? –Stocks represent partial ownership of a corporation. If the corporation does well, its value increases and you
share in the appreciation. However, if the corporation goes bankrupt, you can lose your entire initial investment. –Bonds represent a loan you make to a
corporation or government. Since bonds do not represent ownership, the bond holder could lose their investment if the corporation dissolves, but are
paid before owners of stock.

The Growth Of The Corporate Bond Market
In the last few years, a number of things have changed:
There has been a significant increase in new corporate bond issues (and other hybrid securities) that can be accessed by sophisticated retail investors,
including growth of issues by unrated companies.
Ways for retail investors to access corporate bonds have continued to develop.
Regulatory changes to reduce impediments to retail investment in corporate bonds are slowly occurring.
Ultimately, the maturation of the corporate bond market depends upon three key factors: underlying demand of investors; potential supply by corporate
issuers; regulatory and other impediments to connecting investors and issuers.
Access has long been a problem for individual investors with an ... Show more content on Helpwriting.net ...
While there have been significant developments in the regulatory sphere to assist the development of the retail corporate bond market, there remains
some ambiguity about the treatment of SMSFs and their trustees as sophisticated investors, and their consequent ability to participate in wholesale
market offerings. This ambiguity warrants resolution given the increasing importance of that sector and the increasing relevance of fixed interest
investments for funds with ageing members.
Apple bond
вћўApple has priced a $2.25 billion Kangaroo bond issue, smashing the record for the largest corporate bond issue in Australia.
вћўThe deal is also the largest ever Kangaroo corporate bond. The Kangaroo bond is a term for bonds sold by foreign entities into the Australian dollar
market.
вћўThe deal is seen as a major endorsement of Australia 's corporate bond market, which has at times struggled to lure the world 's largest companies
вћўThe company said the proceeds were intended for "general corporate purposes" including share buybacks, dividend payments and to fund working
capital, capital expenditure, acquisitions and debt repayments
SABmiller
вћўGlobal beer giant SABMiller has completed its first Australian corporate bond issue, raising $700 million of

Market Analysis : Futures Market
Part One: Futures Market Analysis The market that I was following was the corn futures market for July of 2017. All of my data in regards to
futures prices by date can be found at barchart.com. For the purposes of this report, you can view the summarization of this market by viewing the
graph titled "Futures Prices for July Corn 2017" attached here on the right. As you can see this market has truly been anything but stable since January
16, 2017. As you look at the graph over this two and a half month time span, you notice three general trends. The first being that from the beginning of
this analysis, January 16, up until February 15 where the market, overall, was on an upward trend excluding the last week of January. From there, after it
... Show more content on Helpwriting.net ...
I've read many follow up articles on this issue, but none stood out like the one reporting the potential of this armyworm reaching the Mediterranean
and Asia. This article from agweb.com, titled "Alien Armyworm Invading Africa May Reach Asia, Mediterranean," reported signs of the
armyworm spreading and potentially affecting more acres of corn. Combined these to article express the upward trend in the market during this
time. However, we have yet to explain that brief plummet in this trend that happened during the last week of January. This plummet can be briefly
explained by the likes of another article from agweb.com, titled "The 20% Problem." This article touches on the scare of the taxes that Trump wants
to put on trade with Mexico. It discusses how Americans are afraid that Mexico will no longer want to trade corn with us and thus leave us with a
higher supply of corn. This is the exact opposite scenario that the armyworm presented, as higher supply with the same relative demand results in
lower prices. Moving forward to our next big trend, which lasted from February 15th until March 27th, showed an overall decrease in prices for this
market. This downward trend, is credited mostly to the Trump and Mexico trade talks that I previously discussed. However, much more about these
talks began to surface during this time. While reading many articles about this issue, most of them tend to

The Risk of Corporate Bond Market
Purchasing a corporate bond has three primary risks attached to it; 1) market risk, 2) industry risk, and 3) company risk. The US corporate bond
market has trended lower over the last few years although recently the rates have risen relative to the last year. The market risk is that bond investors
will continue to see the same type of rates in US Treasuries as they do in the corporate bond arena and will have no reason to purchase corporate
bonds. Last month the corporate bond yield averaged 2.12% and the 10–year average is 2.57%, so it still has a way to go to even get back to its
10–year average. Since it is only a one–year bond that is being considered, the market risk is probably not as high as the industry risk or the specific
company risk. Considering the industry risk; the airline industry is not an industry that is considered a safe and secure haven for corporate bond
issues, having witnessed a number of bankruptcies and slowdowns, bond investors usually demand higher rates from this industry. As for specific
company risk, Southwest Airlines (SWA) has the reputation of a relatively well managed firm, which continues to show a profit albeit a much lower
earnings per share in 2011 than in 2012. SWA is still in a growth mode; in 2011 they purchased Airtran and increased their presence into a total of 72
cities. Additionally, the company is repurchasing shares and quickly paying down debt. I would purchase a Southwest 1–year bond with a yield of
approximately 5%. The

Questions On Basics On Bonds
Basics on bonds
Naranchimeg Tumurbaatar
Webster University Abstract
The purpose of this paper is give idea to individuals what is investing, how it is beneficial to them, specifically concentrated on how bond works, how
to approach the bond market, and what should consider when purchasing the bond, because thousands of people wondering how they invest their
money, where they should invest, and how the investing process works. It will be very helpful for the individuals who are first time investors.
Financial Paper: Bond Bond is basically IOU according to Joshua; when you purchase a bond, company or government borrow your money in return
they will pay you back certain interest rate in length of the time on the agreement Company ... Show more content on Helpwriting.net ...
Furthermore, bondholder can sell it before its maturity dates when investor needs money or it can be sold more than what it is purchased. As you can
see, bond investment increases your capital and income with offering less risk (Esme).
How and where bonds are issued and traded
The process of issuing bond is very complex, because typically bonds do not directly involve issuers and public and involve large amount because of
the sum. The process involves three main groups: issuers, underwriters, and purchasers (Chad). As I mentioned earlier, issuers are the corporations or
government who sell the bonds and borrow money from investors. Underwriters are the, who act as an intermediary between issuers and investors,
investment banks or other financial institutions that helps issuers to sell their bonds. The good examples are going to be major broker–dealer firms
like Goldman, Merrill Lynch, Morgan Stanley, etc. Purchasers are the bondholders, who bought a bond and lend the money and purchase the bond.
Not like a stocks, bond investors do not have an access to bond price right away. There is no such a thing that bond market is located in a building
and shows all the prices and changes show on the display. Basically, bond market is combination of several numbers of extremely large bond dealers.
The reason is there is no quoted price for the bond for trade and it happened over the counter not in exchanges.
Major segments of bond
According to Gitman and Joehnk,

Notes On Bonds And Debt Investment
Bonds are financial instruments that are used as debt investment. Bonds are a means for an investor to lend or loan money to an entity or organisation
or the government. Time of maturity is usually predetermined (Bodie, Zvi, Kane, and Alan 12). The interest rate for this transaction however might or
might not be fixed or be variable, otherwise known as the spot rate. The bonds are very powerful instruments in the market nowadays. T–bills, which are
government issued are instruments that are used to show the performance of the market, since the interest rate attracted by this instruments is the risk
free interest rate. The higher this interest rate is, the higher the rate of return for the investor in this market. For this project, five bonds have been
selected to serve as the drivers of the bonds investments section. In this selection, diversification has been applied both in industry and geographical
positioning of the markets so as to achieve as optimal as possible. The volatility in price and the volatility in the currency exchange rate of the various
markets and financial instruments have also been considered. Highly performing instruments were selected and have been considered for this project.
This include, the US Treasury bond, Municipal bond (US), Cooperate bond (US), Fortress bond (UK) and the Turkey treasury bond.
Inflation is a factor that is very highly considered in terms of investments and long term financial commitments such

How A Company Needs Help Expand Into New Markets
A company needs funds to expand into new markets, while governments need money for everything from infrastructure to social programs. The
problem large organizations run into is that they typically need far more money than the average bank can provide. The solution is to raise money by
issuing bonds (or other debt instruments) to a public market. Thousands of investors then each lend a portion of the capital needed. Really, a bond is
nothing more than a loan for which you are the lender. The organization that sells a bond is known as the issuer. Thebond market (also debt market or
credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the
secondary market. This is usually in the form of bonds, but it may include notes, bills.
A bond 's price fluctuates throughout its life in response to a number of variables. When a bond trades at a price above the face value, it is said to
be selling at a premium. When a bond sells below face value, it is said to be selling at a discount. The coupon is the amount the bondholder will
receive as interest payments. It 's called a "coupon" because sometimes there are physical coupons on the bond that you tear off and redeem for
interest. However, this was more common in the past. Nowadays, records are more likely to be kept electronically. The maturity date is the date in the
future on which the investor 's principal will be repaid. Maturities can

Coupon Bond : Coupon Bonds
Coupon Bond – Coupon bonds are unregistered and coupons are attached to the bond and the single interested has to be payee by the payable, also the
coupon is been submitted semi annually. Coupon bonds are also known as bearer bonds (Adair, T.A. Jr., Cornett, M.M., Nofsinger, J., 2015).
A. Compute the yield to maturity of Land'O'Toys bonds before the purchase announcement and use it to determine the likely bond rating.
Answer A. Compute Yield To Maturity (YTM) =
N = 20 years
Par Value (PV) =–1,037.19
Payment On Monthly Time (PTM) = 32.50
Future Value (FV) = 1000
Carriage Paid To (CPT) I= 3.00%
Here, Yield To Maturity (YTM) * 2 (Adair, T.A. Jr., Cornett, M.M., Nofsinger, J., 2015) = 3.00% * 2 = 6.00%
Thus comparing the two values, that is the calculated value = 6.00% and the bond rating and yield given in the problem says that by having Bond A
yield can be 6.0%. Thus by looking at this, the bond rating to be announced should be Bond A (De Spiegeleer, J., Schoutens, W., & Van Hulle, C., 2014).
B. Assume the bond's price changes to reflect the new credit rating. What is the new price? Did the price increase or decrease?
Answer B. Here, by assuming that the bond 's price will change and the new credit rating will be reflected. The new Yield To Maturity(YTM) should
be 7.3% that is yearly. Thus, the new price is as mentioned below:
N = 20 years
I = 3.65
Payment On Monthly Time (PTM) = 32.50
Future Value (FV) = 1000 therefore , Carriage Paid To (CPT) PV =

The Argentine Debt Restructuring Of Argentina
The Argentine debt restructuring is a process of debt restructuring by Argentina which began on January 14, 2005, and allowed it to resume payment
on the majority of the USD 82 billion in sovereign bonds that defaulted in 2002 at the depth of the worst economic crisis in the nation 's history. A
second debt restructuring in 2010 brought the percentage of bonds, out of default, to 93%, though ongoing disputes with holdouts remained.
Bondholders who participated in the restructuring, accepted repayments of around 30% of face value and deferred payment terms, and began to be
paid punctually; the value of their bonds also began to rise.The remaining 7% of bondholders later won the right to be repaid in full.
As part of the restructuring process, Argentina drafted agreements in which repayments would be handled through a New York corporation and
governed by United States law. The holdout bondholders found themselves unable to seize Argentine sovereign assets in settlement, but realized that
Argentina had omitted to provide for holdout situations and had instead deemed all bonds repayable on pari passu (equal) terms that prevented
preferential treatment among bondholders. The holdout bondholders therefore sought, and won, an injunction in 2012 that prohibited Argentina from
re–paying the 93% of bonds that had been renegotiated, unless they simultaneously paid the 7% holdouts their full amount due as well.
Together with the agreement 's Rights Upon Future Offers ("RUFO") clause,

Goodrich Rabobank Interest Rate Swap Essay example
1.How large should the discount (X) be to make this an attractive deal for Rabobank?
2.How large must the annual fee (F) be to make this an attractive deal for Morgan Guaranty?
3.How small must the combination of F and X be to make this an attractive deal for B.F. Goodrich?
4.Is this an attractive deal for the savings banks?
5.Is this a deal where everyone wins? If not, who loses?
Introduction:
Players: Morgan Bank, Rabobank, and B.F. Goodrich, Salomon Brothers, Thrift Institutions and Saving Banks
Goodrich:
In early 1983, Goodrich needed $50 million to fund its ongoing financial needs. However, Goodrich was reluctant to borrow (short term debt) from its
committed bank lines because of the following reasons:
1.It ... Show more content on Helpwriting.net ...
Invest in short term treasury bills, large CD's of commercial banks.
Floating rate notes of major US banks whose yields were tied to the Treasury bill notes.
Buy Goodrich floating rate notes with a yield tied to the LIBOR.
Structuring of the Swap:
In the swap depicted above the following can be calculated:
1.Goodrich receives the following amount semi annually:
–(LIBOR+0.5%)+(LIBOR–x1)–10.7% = x1+11.2%
2.Morgan receives the following amount as fees: –(LIBOR–x1)+(LIBOR–x2)+10.7%–10.7% = x1–x2.

Note: As stated in the case (footnote #2 on page 362) this fee can be anywhere between 8 basis points and 37.5 basis points.
3.Rabobank receives following amount semi annually: –(LIBOR–x2)+10.7%–10.7% = x2–LIBOR i.e. it will give out LIBOR – x2.
From exhibit 3 the following is also given:
4.Since Goodrich has BBB– credit rating it could raise capital at a fixed rate probably at 12.5% for 7–10 years.
5.Also, Rabobank could raise floating rate debt at LIBOR – 1/8% (LIBOR + Вј% – 3/8%) since it is an AAA rated bank.
Therefore,
6.From (1), and 4, Goodrich saves the following amount in semiannual interest payments : 12.5% – (x1+11.2%) = 1.3%–x1.
7.From (2), and (5) Rabobank saves the following amount in semiannual interest payments: LIBOR – 1/8% – (LIBOR –x2) = x2 – 1/8%.
8.For this deal to occur,

Mortgage Systems in South Africa
1.MORTGAGE SYSTEMS
2.1 INTRODUCTION
In South Africa, banks fund long–term mortgage loans with short–term deposits. This creates both a liquidity and interest rate mismatch. Basel III has
also introduced new regulation for banks that will need to be addressed. Denmark offers a potential solution in the Danish mortgage model. In this
system long–term mortgages are directly funded with similar equal long–term bonds. This can potentially solve the shortcomings in the South African
banking and mortgage market and lead to more efficiency. Mexico has recently implemented the Danish mortgage model. The Mexican implementation
can be analysed to investigate the efficiency and shortcomings the model brings to an emerging market.
BANKING AND LOAN FUNDING STRUCTURE
During the nineteenth and twentieth century, housing ownership in South Africa was mainly financed by building societies. This was from the effect
from of the British population moving to cities and towns. This resulted in a housing shortage. Friendly societies was created for the middle class to
overcome the shortage. These were non–profit institutions. The British brought the concept to South Africa where building societies were introduced.
The building societies became financial institutions and later banks were formed. Since the move from building societies to mergers of banks,
mortgage lending became an important component of banks' balance sheets. Banks are the most important providers of mortgage finance for housing

U.s. Treasury Bond Market
2.U.S. Treasury Bond Market
Yields on U.S. treasury bonds especially on the bonds with a maturity up to one year decreased significantly between 2007 and 2009 as shown in the
graph below. The one–month treasury bond yield decreased from 4.79% in January 2009 to 0.04% in December 2009. In the beginning of 2007 bond
yields were very high and therefore mortgages takers with adjustable–interest rates had high interest payments. All this led to a high number of default
and strong decrease in house prices. This general weaker economic situation led to a decrease in Bond yields. The decrease became even faster at
the end of 2007, when the more creditworthy borrowers were also unable to repay their mortgages. As reaction to the bad economic situation in
2008 the FED has opened its discount window and lowered the discount rate by 1% in order to make it cheaper and easier for banks to access
money. Both lead to a further decrease in the bond yields as people had no more trust in the products sold by investment banks and therefore looked
for save ways to invest their money. One of this save options to invest money is lending money to the U.S. government in forms of U.S. Bonds. So
the change in yields basically happened because there was a high demand for save ways to invest money and therefore a high demand for U.S. bonds.
The high demand for bonds resulted in high prices and thus low yields.
3.Bear Stearns
The failure of Bear Stearns began in 2007 as two hedge funds managed by

Why Do We Need For Your Financial Calculator?
Female Speaker:As we begin looking at how you value bonds, you might want to have your financial calculator out so you can practice some of the
calculations that I am making in these slides. You might want to pause and see if you can replicate those calculations as we go along. We can use a
timeline to lay out the features of bonds, you probably won't need to do this as solve bond problems, but it might be helpful to look at one as we start
out.
Just like any debt instrument, a bond has a specified maturity date, and a value at the maturity, that we usually call the face values, although, it certainly
is the future value. Like a debt instrument, it's going to make interest payments periodically throughout its lifetime. We are calling that the value of any
investment and it is the present value of its future cash flows.
We will use time values of money, to present value the interim interest payments and maturity value payoff, but present value those back to time period
zero, today to determine what its price would be. Let's consider the valuables that are associated with bonds and you will see that they are almost
exactly the same as those that we use with time value of money problems earlier.
So N is still the number of periods, the number if interest paying periods and I is the market rate of interest, so that is a little bit different, that is the
market rate, the prevailing rate of interest for bonds of this type in the marketplace. Present value is price,

The Current Debt Default Crisis
This policy memo addresses the current debt default crisis in Argentina. Despite the fact that 93% of the bondholders accepted reduced payment due to
the bankrupt of Argentina, the two hedge fund NML Capital and Aurelius Capital Management have demanded full repayment of the $1.5bn (ВЈ920m)
they are owed, and have sued to prevent the country from paying back only its restructured bond . To relief the dilemma after July's ruling, the
financial sector should persuade the 93% exchange bond holders waive the RUFO to alleviate the current financial pressure over the next few months.
Problem Statement and Strategic Issues
The Argentina's debt default crisis this year could be trace back to 2001's crisis. After that, the government begin to ... Show more content on
Helpwriting.net ...
One helpful method to restore this mess is to persuade at least 75% of our existing exchange bond holders to waive the RUFO clause in order to
avoid the hundreds of billions of new obligations before RUFO expire, while in the meantime continue seeking financial assistance to pay back holdout
and restore our reputation. Rapid actions are required to solve this urgent crisis.
The importance of Argentina back to bond market is so self–evident. The low foreign exchange reserve, which is totally $290 billion with only $160
billion available, is obvious insufficient to debt repayment, let alone other use of foreign exchange reserve. Normally countries with similar situation
will choose to financing from bond investors. However being abandoned international bond market makes even high interest rate sovereign bonds is
too risky for investors and will become more difficult to restore access to the world's capital markets without figure out the default with no delay. This
means the exchange bondholders have to receive their money as soon as possible. Since there are already a group of bondholders begin to work with
Deutsche Bank to remove the RUFO clause , our government should send officials to help push enough creditors approve this decision and sign the
supplemental indenture. Moreover, government could conclude new terms (on–table or off–table) to give extra compensate to exchange bondholders,

Vietnam Bond Market
Introduction
In recent years, the issue of efficiently mobilizing capital has become the concern of all companies. There are some ways of doing this: borrowing
from the banks, issuing stocks or issuing bonds. However, when the interest rate of borrowing from banks is very high due to high inflation, together
with the stock market is quite instable; calling for capital from bond market is much more preferred by investors.
In the context of this report, some major points regarding the bond market in Vietnam are presented. Firstly, a common picture about the Vietnam bond
market is drawn. Next come the types of bonds and major participants in this market. Finally, several ways by which bonds are issued are described in
details.
I/ ... Show more content on Helpwriting.net ...
However, Vietnamese individual investors still prove to be unprofessional for some reasons: Main source of capital usually coming from banks, lack of
reliable information about the market, limitation in accurate evaluation of the value of bonds and the bond issuing organizations. Therefore, they have
tendency to invest following the majority: sell immediately when prices of securities decrease and buy right away when prices increase. This will lead
to the high fluctuation of the market, so easily results in the losses suffering of many investors.
2. Fund managers
Fund management is the professional management of various securities (shares, bonds etc.) to meet specified investment goals for the benefit of the
investors. Fund management companies play an important part in the development of securities market. Since the establishment of VietFund
Management, the first fund management company in Vietnam in 2003, until now, 38 fund managers have been granted operation licenses by SSC.
Among them, FPT Fund Management Joint Stock Company has the highest chartered capital with 110 billion VND and Lotus IMC has lowest charter
capital with 5 billion VND.
3. Brokers
Broker has recently occupied the position of the hottest career for youngsters, although it is still new in Vietnam. The term "broker" is used to indicate
a qualified and regulated professional who buys and sells all kinds of securities through market makers or

Not-For-Profit Financial Analysis
Medicare and Medicaid cuts have placed financial pressures on both not–for–profit and for–profit organization forcing them to seek other avenues to
increase their equity position. In effort to increase their equity positions, for–profit organizations may issue new shares to investors and make every
effort to increase their bottom line through the use of depreciation, net income and noncash expenses. Not–for–profit's main source to increase their
equity is through the making money from operations, governmental grants, selling of real estate and donations (Zelman, McCue, Millikan, Glick,
2014). Tax–paying entities typically lean towards issuing debt because of the potential tax savings. One of the advantages of issuing debt ... Show more
content on Helpwriting.net ...
If the cost of a device is given to be $400,000 which depreciates on the basis of straight–line basis over five years with a zero salvage value, then the
cost of borrowing the money to purchase it will come out to be $60,000 which is financed at the rate of 15 per cent for five years. Since the before tax
lease payments per year are $80,000, then the tax rate for the Mega center is 40 per cent because the after–tax cost of debt equals 9 per cent. From a
financial perspective, the hospital should lease the surgical device rather than borrow the money to purchase it since leasing would be more profitable
as compared to what it would get if it borrowed the amount to purchase the equipment (Zelman, McCue, Millikan, Glick,

The Statement Storage Corporation Bond Accounting Essay
Lyons Document Storage Corporation–Bond Accounting
Lyons Document Storage Corporation is a secure document storage company which was incorporated in 1993. Said organization began as a
family–owned stationery business which refocused its business strategy upon the entrance of significant competitors; Staples, Office Depot, and Office
Max (Bruns, 2010). As the secure document storage industry had recently emerged and showed rapid growth potential, organization executives
implemented the decision to redirect business strategies to capitalize on new market opportunities.
Consequently, the shift in business strategy required the purchase of storage facilities and equipment to transport documents to and from said facilities
(Bruns, 2010). Therefore, to finance the new business direction the company issued $10 million in 20–year term bonds in 1999. Said bonds were issued
at a coupon rate of 8% and sold at a 9% market rate. Additionally, the organization was advised in 2008 that said bonds could be redeemed early and
reissued at lower interest rates; saving the organization substantial costs in interest payments. As such, company president David Lyons instructed
employee Rene Cook to research said opportunity and provide information regarding the effect of early redemption of said bonds.
Bond Discounts and Premiums Corporations issue bonds as a method of financing company operations. As such, bonds may be issued as callable
permitting the issuing organization to repay the

Advantages And Disadvantages Of Investment Bonds
In finance, bonds are an instrument of liability. The bond issuer owes the debt to the bond holders and the holders owes the term of the bonds and can
claim the principal once the maturity date reached. Coupon can be paid at regular intervals such as semi–annual, annual or monthly. Besides that, the
bond usually is negotiable which means that in secondary market, ownership of the instrument can be transfer to other people. In the secondary market,
bonds are highly liquid. This is because the transfer agents have medallion stamp the bonds at the bank.
Therefore, a bonds is a form of loan or IOU (I Owe You). The lender (creditor) is the holder of bonds, the borrower is the issuer of the bond and interest
is the coupon. The borrower with external funds supply bonds for long–term ... Show more content on Helpwriting.net ...
As a creditor (lender), between bondholder and stockholder, bondholder have the priority to receive the rendered in advance of stockholders but they
have secure creditor when the company is facing bankruptcy. The significant difference between bonds and stock is bonds normally have a defined
term, will redeemed after maturity date, however stocks can last long for many year until the company have opposed to liquidation.
There are some pros and cons of taking bonds as an investment instrument. The disadvantages of investing bonds are interest rate risk. For example,
fixed rate bond are taking risk when the general common interest rate increase and their market prices will fall. Decrease in market price of the bond
will bring an increase in the rate of return received from investing bond because the payment are fixed. This situation will reflect the ability of investor
to obtain a higher interest rate on their investment. Furthermore, bonds have different of risk and only particular risk will affect certain investor.
Bondholders will influenced by price change in bond especially for financial institutional such as mutual

Pros And Cons Of Enhanced Debt Management
The yields given by Greece government bonds are very high. It reached 61% in July 2011 for a 5–year bond, while the 10–year bond in Jan 2012
reaches 35%. The government bonds in Portugal, Cyprus and Ireland have similar yields like Greece. High bond yields is burdensome to the country.
In order to solve this problem, Enhanced Debt Management is one of the solution.
1) cost is cheaper compare to bond financing The non–tradable debt instrument helps to raise funds at the lower cost compare to the bond markets. The
bank loan contract is one of the non–tradable debt instrument. The non–tradable instruments will be stored at face value in book instead of
marked–to–market. The cost of this method is cheaper because of reduction in interest rate. The rising bond yields is expected to worsen the debt of
the country. This is due to the trading bonds between the speculators. The speculators purchase large amount of government bonds to create shortage to
the market. This forces the government to rise yields and create a more worsen situation to the country. A lower interest rate is required for the
non–tradable debt instruments compare to bond market yields during crisis. Since the non–tradable debt instruments are cannot be traded, there is no
market. This means that there is no speculation in the market. ... Show more content on Helpwriting.net ...
However, this method does not directly address the massive and rising amount of non–performing loans in the banking sector. In conclusion, Enhanced
Debt Management can only provide an alternative to eliminate the ongoing and expensive destruction of market value and the potential output
deadweight loss. This method is cheaper than the Troika's method (Werner,

Bond Market Trends
Topic 2Bond market developments
Overview
Financial markets have been subject to significant changes in recent years due to the credit crisis. Experts believed that risk was being under–priced,
which was expressed in the markets by a narrow spread. They believed that once the market corrected this under–pricing and re–priced the risk, it
would likely cause a dislocation in financial markets by overshooting its equilibrium. Hence the prices, yields and returns on bonds have been
significantly effected by the global financial crisis. Looking at the effects this credit crisis had on the short term money market by evaluating bond
performance over the past 10 years can give us significant insight into the extent of this dislocation.
– ... Show more content on Helpwriting.net ...
Although Kangaroo bonds had a significant decline in the second half of 2007, they managed to bounce back. This is due to overseas investors
wanting to take advantage of the arbitrage that can be gained from raising funds in Australia and converting them to US dollars when they need to
instead of raising funds straight in their own currency. This allows them to take advantage of slightly lower funding costs, meaning the investor
demand for kangaroo bonds would increase significantly. This is the reason for recent upturn in the kangaroobond market.
– the amount of bonds issued by financial institutions
Financial institutions have had a steady issuance growth and were not significantly impacted by the credit crisis as they have such sound balance
sheets. This makes investing with them fairly "risk free" thus investors are confident enough to purchase their bonds. They still however had to widen
their credit spreads and shorten their average maturity, both to survive in the current climate and to accommodate investor preference of not wanting to
lock into any long term investment right now. Banks also are able to keep their bond issuance constant as they use is as a precautionary measure to
raise enough funds to meet their obligations incase of further market dislocation.
– Explain the impact of the global financial crisis on the issue of bonds by securitization vehicles.
Bonds issued by securitization vehicles or SPV's

Arbitrage In The Government Bond Market Essay

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Arbitrage In The Government Bond Market Essay