Fixed Income Securities
A Relative Safety Investment For Rough Economy
U.S. economic prospects are so grim as shown by recent leading economic indicators. Investors will take shelter in the relative safety of the bond market during a painful economic period. Weaken earnings during the rough economic time will cause price-earnings multiples of stocks collapse triggering stock market sell off. Read more
Equities(Stocks)
Most Popular Investment for Long-Term Focus
Majority (75 percent) of U.S. individual investors are currently investing in domestic equities and 60percent in international equities. The figures are revealed on July 29, 2008 by Schroders, a global asset manager, on its semi-annual survey of U.S. individual investors. The survey also revealed that individual investors are continuing to build their portfolios and maintaining a long-term outlook with an investment time horizon of more than five years. Read more
Credit Default Swaps
Financial instruments called Credit Default Swaps (CDS) are derivative securities that have been getting more attention recently. They are widely used in the financial markets especially by bond insurers. Exposure to these securities is not limited only to bond insurers but also to investment banks and bond fund. Many largest bond funds have exposure to Credit Default Swaps. Read more
Interest Rate Swap
The most popular interest rate swaps are
fixed-for-floating swaps, also called as
vanilla interest rate swaps, which is an exchange of interest payments on a specific principal amount. It involves exchanging a fixed amount per payment period for a payment that is not fixed. The floating side of the swap would usually be linked to another interest rate, often a 3-month or 6-month LIBOR as its floating rate. In an interest rate swap, the principal amount is never exchanged; it is just a notional principal amount.
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