Originally posted by: ritzbitz
hi sur, will be looking forward to the answers to your own questions😉😛
What is a Bell Shaped Yield Curve? Why is it Bell Shaped? What does a Bell Shaped Yield Curve Signify? What does a typical Yield curve look like? Why? Why is the Canadian Dollar referred to as a reciprocal to the Japanese Yen? If the Euro CD pays 3.7% and the USD pays 5.3%, why the differential in rates? Would it be prudent to invest in Euro or USD? Why?? Why is March 07 Gold future more expensive to than the Dec 06 Gold future? What are second order derivatives? What potential risks do they carry?? What is the "Dogs of the Dow" strategy used in investing? Why does it work? What is the rule of 72 in interest rate compounding? Why have copper prices quadrupled in the last 3 years? What is the highest price that Silver ever sold for? What is the highest price Gold ever sold for? When a country's currency weakens what generally happens to its exports? What is a "Confirmed" Letter of Credit? What does "Laddering" in Certificates of Deposits mean? Why is it a good strategy?? What significance does Gold/Silver price ratio have on the world economy? Why is stagflation so hard to remedy? If you purchased Bonds yielding 4% and interest rates go to 10%, what can you expect to sell the Bonds for? Why is "deadlock" good in any negotiations? What is the "put-aside" Gambit and why does it work in any negotiation? If I gave you tomorrow's newspaper today, how would you capitalize from the information to get the best IRR (Internal rate of return)? - If your house's price doubled in 12 years, what was the rate of return on your money if had bought the house "Cash Down"?
PS: it took me a min. to pull these questions but i lent you a day to answer these.. so plz take your own time..😛
- What is a Bell Shaped Yield Curve?
When the mid term (10 yr) bond yields are greater than the short term (2 yr) and the long term (30 yr) yields
- Why is it Bell Shaped?
There is no demand for either short term or long term money
- What does a Bell Shaped Yield Curve Signify?
Usually indicates the onset of a recession coming within 6 mths to a year and a half
- What does a typical Yield curve look like? Why?
Long Term (30 yr) rates >> Mid term (10 yr) >> Short Term (2 yr)
People lending for 30 yrs face a higher risk of changing interest rates hence demand more return for their risk
- Why is the Canadian Dollar referred to as a reciprocal to the Japanese Yen?
Canada derives a lot of revenue from Crude Oil reserves whilst Japan has no crude Oil reserves at all. In an ideal world, both currencies move in opposite directions as the price of oil fluctuates on the world markets
- If the Euro CD pays 3.7% and the USD pays 5.3%, why the differential in rates?
European economy is in much better shape than the US Economy
- Would it be prudent to invest in Euro or USD? Why??
Depends on where you expect the two currencies to be in the time frame that you hav eto make the investment in – the rates should not factor into the decision making process
- Why is March 07 Gold future more expensive to than the Dec 06 Gold future?
There is an interest rate component built into the March future…..
- What are second order derivatives? What potential risks do they carry??
Very high funda currency trading wherein you borrow one currency at a low rate (e.g. Japanese Yen) and invest in a higher interest paying currency (e.g. US Dollar or even the Indian Rupee)-- Risky move !!
- What is the "Dogs of the Dow" strategy used in investing? Why does it work?
You take the 5 or 10 highest yielding (Highest Dividend paying) stocks of 30 Dow stocks and buy them - after a year, you sell those which have gone up in price (Div yields have dropped) and revise your portfolio again with the top 5 or 10 highest paying stocks of the Dow 30.
This supposedly works because the "Blue chips " cycle but are supposedly inherently "reliable"
- What is the rule of 72 in interest rate compounding?
# of yrs to double your invested principal= 72 divided by the rate of return
- Why have copper prices quadrupled in the last 3 years?
Demand from India and China was much greater than the world supply of Copper
- What is the highest price that Silver ever sold for?
Jan 1980 – $ 52 an ounce
- What is the highest price Gold ever sold for?
Jan 1980 - $ 854 an ounce
- When a country's currency weakens what generally happens to its exports?
Absolutely, the goods exported become cheaper for the country importing the goods
- What is a "Confirmed" Letter of Credit?
The Advsisngf Bank guarantees the payment to the seller (exporter) and takes out the Buyer's Bank as well as the country risk the buyer is in..
- What does "Laddering" in Certificates of Deposits mean? Why is it a good strategy??
Laddering means you do a 6 mth, 1 yr, 2 yr, 3 yr, 4 yr and 5 yr CDs – Good strategy coz you are coverd if rates go up of fall as you keep "renewing" the CDs …….thereby maintaining the above laddering strategy
- What significance does Gold/Silver price ratio have on the world economy?
When the world economy is improving, the demand for Silver picks up thereby leading to higher Silver prices and the ratio goes down
- Why is stagflation so hard to remedy?
Stagflation means Inflation is rampant with higher unemployment rate – typically the Federal resrve Bank would raise rates to curb inflation but then the unemployment rate would go up tooo. If they lower the interst rates to help unemployment, inflation would go up too. The Federal Reserve board id then in a dilemma
- If you purchased Bonds yielding 4% and interest rates go to 10%, what can you expect to sell the Bonds for?
Your initial investment is only worth approx. 40 % of the price as the Buyer of the 10% Bond will pay only 40% of the face value since the going rates are now 10%. All this assuming there are no "Call Clauses" on the Bond.
- Why is "deadlock" good in any negotiations?
It puts both the Seller and the Buyer at risk of loosing the deal
- What is the "put-aside" Gambit and why does it work in any negotiation?
One uses this so that the difference appear minor at the end and can be worked out at the end rather than at the early stages
- If I gave you tomorrow's newspaper today, how would you capitalize from the information to get the best IRR (Internal rate of return)?
Get the winning Lottery number and buy the Lottery ticket
- If your house's price doubled in 12 years, what was the rate of return on your money if had bought the house "Cash Down"?
72 divided by 12 is 6 so the rate of return was 6% as you paid everything down- ofcourse IRR is pretax !!
Phew: Above are my POV and not meant to be advise – I am an Engineer with a Passion for Stock and Futures Markets – I am learning this and will always be a student of this game !! Hope this helps, Glitzy