tag:blogger.com,1999:blog-30643134.post6442110350643204093..comments2023-12-26T01:10:26.319-05:00Comments on Accrued Interest: If you were to rescue her the reward would be...Accrued Interesthttp://www.blogger.com/profile/05096191765979971184noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-30643134.post-849440893940395302007-06-27T11:27:00.000-05:002007-06-27T11:27:00.000-05:00Great minds think a like Robert... see the new pos...Great minds think a like Robert... see the new post...Accrued Interesthttps://www.blogger.com/profile/05096191765979971184noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-48495138695932796332007-06-27T10:33:00.000-05:002007-06-27T10:33:00.000-05:00Off topic, but...What do you think about Mssr. Gro...Off topic, but...<BR/><BR/>What do you think about Mssr. Gross' latest rant regarding contagion/subprime and CDOs?<BR/><BR/>Due to your prior posts, I am going to assume that BILL GROSS IS LYING. Given that, what is his angle?Roberthttps://www.blogger.com/profile/07401402773690968514noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-68401900962207114102007-06-27T07:58:00.000-05:002007-06-27T07:58:00.000-05:00Well, only if the investor can borrow at the same ...Well, only if the investor can borrow at the same cost as the company. You make a fair point though.Accrued Interesthttps://www.blogger.com/profile/05096191765979971184noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-85326850529931595802007-06-27T07:46:00.000-05:002007-06-27T07:46:00.000-05:00if you remember from your intro to finance class, ...if you remember from your intro to finance class, leverage does not matter. in other words, it is true that by levering up, a corporation can move up the returns by taking on a higher level of risk. at the same time, a stockholder can achieve the same returns by buying an unlevered stock on leverage. thus, different investors can attain their desired levels of return and leverage by purchasing an unlevered security at various leverage points on their portfolio.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-10477451324934460672007-06-26T19:07:00.000-05:002007-06-26T19:07:00.000-05:00I completely made up the numbers to illustrate the...I completely made up the numbers to illustrate the point. I'm sure you are right. In reality a Debt/Equity ratio of 0.33 would probably not garner a Baa rating anyway so my numbers aren't perfect.Accrued Interesthttps://www.blogger.com/profile/05096191765979971184noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-71766047814116923422007-06-26T18:25:00.000-05:002007-06-26T18:25:00.000-05:00If I'm doing the math right, ROE of 7% for an all ...If I'm doing the math right, ROE of 7% for an all equity firm, and an ROE of 10% for a one-third debt, two-thirds equity firm, implies a borrowing cost of 1%, which seems a little low.Anonymousnoreply@blogger.com