Short-term investments: the best places to park your cash
Article Abstract:
Corporate investors seeking short-term investment vehicles need to be careful. Investments with higher yields inevitably have higher risks; extending maturities or lowering the instrument's quality increases risk. Higher yields are available through extendable bonds, Dutch auction Money Market Notes, and Variable Money Market Certificates. It is also possible to get some long-term corporate debt instruments at short-term rates; another way is through corporate debt 'called' by the issuer. Other means are: investments in unit trusts or mutual funds. Reversing securities may be the answer to the need for raising cash fast; this is a loan which uses securities as collateral. Other devices include hedges, interest rate swaps, caps, portfolio insurance, and repurchase agreements.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1987
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Maturity choices can be easier than you think
Article Abstract:
Investors can take advantage of swings in interest rates by assuming a maturity risk. A technique for forecasting interest rates is to study the success of money market funds of potential interest during the last two major interest rate cycles. Compare the 'average maturity' of these funds with those of other funds. Create an index by adding the days of average maturity and then dividing the total number of days by the number of funds. Track the average maturity every Thursday in the Wall Street Journal's list of money market rates. A rising index number will indicate that portfolio managers of the fund believe that interest rates will soon fall.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1988
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Smart investors use the calendar
Article Abstract:
Investors can take advantage of predictable, seasonal patterns in interest rates in both the public and private sectors of the economy. The highest interest rates are typically available during the final two weeks of each quarter, since borrowing for business tax payments occurs simultaneously with US Treasury auctions of 'mini-refunding'. Investors should check available yield premiums before making investments in maturities before a quarter-end.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1988
User Contributions:
Comment about this article or add new information about this topic:
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