-=07s62=-: 2009

Saturday, November 28, 2009

BBQ

26th Dec my house bbq who coming? tell me asap...

Thursday, October 1, 2009

YTC VS YTM

Sorry... Another post by me... To business/ finance people out there...

Regarding callable bonds again. Since I typed the following to XY, might as well post it up...

Cus T(typing) = sunk cost.

In the following paragraphs, YTC = yield to call; YTM = yield to maturity.

Analysis on the basis that YTC less than YTM => call at the earliest possible date.

Here, note the derivation of the YTC. It's already based on the assumption that the issuer works to the worst disadvantage of the investor, i.e call the bond at the earliest possible date since that would act to the least benefit to the investor. To further explain that, if the bond can be called between t years to n years (maturity), our calculations are based on the assumption that it will be called after t years, so YTC is calculated by setting P at today's selling price equals to cash flows from years 0 to t.

So let me emphasize again that the value of YTC is already based on the earliest possible date the bonds can be called and that the issuer cannot call any date earlier than that. (In fact, the earlier the bond is called the lower the yield rate of the investor.)

Somewhat a repetition of the previous post, just that YTC is brought to light here.

Hope it helps. =)

This time I didn't dig up last year's notes but I trust my understanding. Anything to correct, please tell me.

STAT (probability, models/ modelling), ECON (though need to read up a bit), FINA (mainly corporate finance), MATH (just a fair bit on proving techniques, linear algebra and multivariate calculus)...

If you need help, can ask me... Because it really helps me to recall whatever I've learnt.

And knowledge is cumulative. =P

Very cute...

Watch this: its very cute..but i dunno how to get the whole video here.

http://www.youtube.com/watch?v=yHnrUbtKQX0

and this:

Wednesday, September 30, 2009

Callable bonds

Sorry for having 2 posts in a row. But I think the following may be useful to classmates doing finance-related stuff. =) A little something I was discussing with XY~ Just for your information when you need it.

A callable bond is a bond which the borrower (issuer) has an option to redeem prior to its maturity date.

The investor should assume that the borrower will exercise the option to the disadvantage of the investor.

Given that the redemption value on all redemption dates are equal (note that we're taking an assumption here):

1) If i less than g or P greater than C, redemption date will be the earliest possible date.

2) If i greater than g or P less than C, redemption date will be the latest possible date.

(zzz damn irritating... somehow the greater than/ less than signs are rejected by blogger due to conflict with html code... zzz... !@#$%^&*)

If the redemption values on all the redemption dates including the maturity date are not equal, then it may be necessary to take some trial calculations at the various possible redemption dates to see which is the most unfavourable to the investor.

Some actuarial symbols here:

i = yield rate, yield to maturity, yield to redemption

g = modified coupon rate where Fr = Cg (F = nominal value, par value, face value; r = coupon rate, nominal yield; C = redemption value. Here, please also note that F != C)

P = price of the bond

C = (as mentioned above)

Earliest possible date here isn't disputable, and should be specified by the bond issued.

And here, the reason why I emphasized that the "investor should assume that the borrower will exercise the option to the disadvantage of the investor" is because the investor is the passive party. Pay special attention that the issuer is the one who would finally decide when to redeem the bond and it may not be the "earliest possible date". Therefore, as a third party, when we analyse such cases, we should take special consideration to the risk the passive party faces.

Hope this helps! =)

Monday, September 21, 2009

MAF (19092009)

OPS.

That balloon kept blocking my view! ><"

Woah~ I think this year decorations is the best I've seen.

More photos taken by Jean are posted on facebook. ^^

Sending niexin off (14092009)

Wednesday, September 9, 2009

62's everywhere!

Erm...this should be zoe..think she took her photo herself somehow..yeal..this is sunset on the top floor..

We're wearing the same clothes! so worldly..

Another 62. Haha..and we'll take more when we see more!

Monday, August 31, 2009

See what kind of question we get..

I am going crazy le...so many questions and so little time..I got 54 extra physics questions per week, and online, and its counted as part of the course marks...