MGT330H5 Lecture Notes - Lecture 1: Warren Buffett, Net Income, Credit Risk
Document Summary
Traders to follow: warren buffet, emanuel derman. Middle east had problem and us had many holdings. Panic led to lower daily closes + very high trading volume. Portfolio can be hedged by long put options. Summer of 2000 bubble burst and sp500 dropped substantially. Mortgage backed assets were very popular (cdus) Teaser period of interest rates were all expiring around 2007-2008. Transfer of capital - current vs late consumers (saver lenders + borrow spenders) Real assets (investment) - used to produce goods and services. Financial assets (investment) - claim on a real asset (i. e. stock) Net income is split into either retained earnings or dividends. Typically high growth firms retain most and mature companies will pay higher dividends. No company will pay 100% dividends due to need for buffer money. Options to call back before maturity or convert to shares. Callable will have higher yield due to the risk embedded.
