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1-11-14 - Liquidity Risk-how easily can you sell the...

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Personal Financial Planning November 14 *Bonds -maturity -quality Maturity Risk -money market: 0-1 year -short term: 1-3 years -intermediate term: 3-10 years -long term: 10-30 years Default Risk AAA, AA: very low risk A, BBB: low risk Below BBB: considerably higher risk, “junk bonds” Rating Agencies -Moody’s
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Unformatted text preview: Liquidity Risk-how easily can you sell the bonds-how easily it can be turned into cash Expected Return-ER = risk free rate + risk premium-RP = liquidity risk + maturity risk + default risk *Stocks-preferred stock-common stock Valuing stocks-outlook for company-outlook for industry-company growth vs industry growth...
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