contributing to the growth of subprime lending was the widespread practice of securitization, whereby banks bundled together hundreds or even thousands of subprime mortgages and other, less-risky forms of consumer debt and sold them (or pieces of them) in capital markets as securities (bonds) to ...
While these and other institutions are often called banks, they do not perform all the banking functions described above and are best classified as financial intermediaries. Institutions that fall into this category includefinancecompanies,savings banks,investment banks(which deal primarily with large busi...
Bonds The bond, as a debt instrument, represents the promise of a corporation to pay a fixed sum at a specified maturity date, and interest at regular intervals until then. Bonds may be registered in the names of designated parties, as payees, though more often, in order to facilitate hand...
Junk bonds are an important part of fixed-income financing, but because of their risky, speculative nature, they’re not for everyone. The risk may be just too high. On the other hand, if you’re considering these bonds, it’s best to start small. Test the waters with only a small ...
Using such short-term securities helps reduce the effect that changes in interest rates may have on the bonds and other securities held in the fund, known as duration risk. But even with new regulations to help reduce the risk of money market mutual funds, they can still lose money. In ...
Treasury bonds) with a diversified portfolio of risky assets (such as stocks and alternative investments). The CML slopes upward because the expected return (over and above the risk-free rate) should theoretically be commensurate with the risk an investor is willing to take. The optimal portfolio...