Short-term I would lose about 1-2% percent on the
borrowed fund but in the long-term I would gain 1-2%
when I lock in a long-term bond that has a coupon rate
that is above the borrowed rate. I don't see how bond
would be a loser if interest rates goes higher since I
will locking in a bond
--- Tyl [EMAIL PROTECTED] wrote:
I don't see how bond
would be a loser if interest rates goes higher since I
will locking in a bond that yields a higher coupon rate
than the borrowed rate.
If you can borrow money at a lower interest rate than what the bonds pay,
and you hold the bonds until
Anyone know of a good way to take advantage of the
current interest rate? I was thinking of borrowing a
lot of money and invest it in short term bonds then as
interest rate goes higher I would lock in long term
bonds then making money on the borrowed money.
The question now is how do you borrow
The standard economic response to your argument, I believe, would be that if this were a good idea, so many people would already have borrowedand investedthat the lending rates would rise until it was no longer profitable to do what you suggest. The implication is that at the moment, the market
