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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Robert who wrote (11826)2/9/2000 8:34:00 PM
From: Justa Werkenstiff  Read Replies (2) | Respond to of 15132
 
Robert: One would buy the GNMA fund if they wanted cash flow primarily and not as a huge bet on interest rates. As of tonight, she is yielding 7.0% with an average maturity of 4.8 years. I don't think the prepayment risk is any big deal. But buy a treasury if you want to make a pure interest rate bet.



To: Robert who wrote (11826)2/10/2000 10:02:00 AM
From: Investor2  Respond to of 15132
 
RE: "...the Ginnies won't rise much at all because of the mortgage prepayment risk -- "

That is correct, but the current interest yield is higher than other equally-safe bonds to compensate for that risk.

Best wishes,

I2


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