Files & Resources / Downloads: youtube-breakingintowallstreet-com.s3.amazonaws.com/Risk-Free-Rate.xlsx youtube-breakingintowallstreet-com.s3.amazonaws.com/Risk-Free-Rate-Slides.pdf For the Table of Contents and the written summary, please see the video description under "Show More."
This video perfectly illustrates how SVB's collapse can be attributed (in part) to its bond portfolio's exposure to interest rate risk. Maybe you should create a video that explains SVB's collapse and how the principles here coincide with today's events.
Yup, that's true. We published an article about it today: mergersandinquisitions.com/silicon-valley-bank/ And I may create a video on this AFS vs. HTM issue and bank regulatory capital next week and use it to explain more about SVB.
Am I reading this right? At the end of 2022-12-31, you will get ¥107,993; if the Yen strengthens to USD:JPY to 80, this will be translated into $1,349.91. So, compared with the original investment of $1000, how did you lose money? Don't you want to buy a foreign investment when your home currency is strong and sell when your home currency is weak to maximize the exchange rate effect?
If the Yen strengthens, USD are now worth less. If the USD:JPY falls to 80, meaning the JPY has strengthened, the final bond price is only 66,150 when converted back to JPY. I think you reversed something. Buying when the home currency is strong and selling when it's weak is what we demonstrated here - an FX rate of 130 means the JPY is much weaker. So the Japanese investors benefited from buying UST when the FX rate was lower (100), meaning a stronger JPY, and selling when the FX rate was higher (130), meaning a weaker JPY.
Files & Resources / Downloads:
youtube-breakingintowallstreet-com.s3.amazonaws.com/Risk-Free-Rate.xlsx
youtube-breakingintowallstreet-com.s3.amazonaws.com/Risk-Free-Rate-Slides.pdf
For the Table of Contents and the written summary, please see the video description under "Show More."
This video perfectly illustrates how SVB's collapse can be attributed (in part) to its bond portfolio's exposure to interest rate risk. Maybe you should create a video that explains SVB's collapse and how the principles here coincide with today's events.
Yup, that's true. We published an article about it today:
mergersandinquisitions.com/silicon-valley-bank/
And I may create a video on this AFS vs. HTM issue and bank regulatory capital next week and use it to explain more about SVB.
Great refresher thank you
Risk free rate refers to only default risk
Thanks for watching!
Am I reading this right? At the end of 2022-12-31, you will get ¥107,993; if the Yen strengthens to USD:JPY to 80, this will be translated into $1,349.91. So, compared with the original investment of $1000, how did you lose money? Don't you want to buy a foreign investment when your home currency is strong and sell when your home currency is weak to maximize the exchange rate effect?
If the Yen strengthens, USD are now worth less. If the USD:JPY falls to 80, meaning the JPY has strengthened, the final bond price is only 66,150 when converted back to JPY. I think you reversed something. Buying when the home currency is strong and selling when it's weak is what we demonstrated here - an FX rate of 130 means the JPY is much weaker. So the Japanese investors benefited from buying UST when the FX rate was lower (100), meaning a stronger JPY, and selling when the FX rate was higher (130), meaning a weaker JPY.