A eurobond is a debt security handled internationally by syndicates, groups of bankers and/or brokers who underwrite and distribute new issues of securities or large blocks of outstanding issues. It is typically in bearer (non-registered form) and is issued outside the country of the currency in which it is denominated.
Borrowers and lenders are spread around the world, while the intermediaries are spread across Europe, with the majority of business being done from London. The market was founded in the early 1960s and has provided a competitive source of funding for borrowers who can tap discreet but important sources of finance. Japanese banks, pension funds and insurance companies have become important lenders in recent years and there are still plenty of wealthy individuals who prefer the anonymity offered by bearer securities. The eurobond market is the world’s second largest securities market after the US bond market in terms of trading volume and the third largest after the US and Japanese bond markets in terms of debt outstanding. Read the rest of this entry »
Delta Delta peaks in between the two strike prices (i.e. near the money)—notice the difference
between the one-month Delta profile and the one-week delta profile. This shows us that small movements in the underlying stock price at these levels will have a more dramatic impact on the value of the Bull Put position. Delta becomes much more sensitive as time decays. This means that the Bull Put risk profile itself becomes much more sensitive as time decays. This is because Time Value is depleting to negligible levels, and so the stock movement is being followed almost exclusively by Intrinsic Value at these levels. Notice that as the stock price veers away from the money (on both sides), Delta is hardly sensitive at all and that the most sensitive Delta action is occurring close to the two strike prices.
Gamma The acceleration and deceleration of Delta is reflected in the Gamma values. As you would expect, Gamma peaks in positive territory where the stock is just below the lower strike price and troughs into negative territory where the stock is just above the higher strike price. Read the rest of this entry »
BACKGROUND AND PURPOSE
The primary purpose of regulations is to protect investors, and the roots of governmental regulation of mutual funds in the longer-established markets are often associated with major scandals and market crashes.
In the USA, the stock market crash of 1929 prompted an extensive investigation by Congress into the securities industry. It revealed that overselling, or ‘ramming’ of shares, particularly radio company shares, had created unrealistic expectations and false, overvalued markets. The investigation resulted finally in the Investment Company Act 1940, which established the Securities and Exchange Commission (SEC) - this Act remains the cornerstone of US mutual fund regulation - and the Investment Advisers Act 1940. Along with two Acts passed into Federal law in the 1930s - the Securities Act 1933 and the Securities Exchange Act 2934 - these four Acts provide the bulk of federal powers over the activities of US investment companies. In fact, the only addition to US legislation affecting all companies since 1940 is the Sarbanes-Oxley Act of 2002 and that has only an indirect bearing on mutual funds themselves, being more concerned with accounting, auditing and disclosure practices of trading companies, following the Enron and Worldcom scandals. Read the rest of this entry »
I talk with prospective brokerage clients all the time, and find it revealing, although not surprising, that while they’ll lose sleep worrying about how many dollars their holdings are worth, it rarely occurs to them to worry about the worth of the dollars themselves.
That’s an enigma that shouldn’t be an enigma. In a well managed economy, dependable purchasing power should not be a problem. Domestic investors shouldn’t have to worry about the dollar.
The fact that the declining dollar is a domestic problem and people aren’t generally aware of it shows how successfully the government has used the consumer price index (CPI) as a red herring to divert attention from the real cause and extent of inflation. Read the rest of this entry »
