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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: AK2004 who wrote (576398)	5/18/2004 3:50:07 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

Re: 'you borrow 100K at 5%' OK. 'and your portfolio of 100K earns 4%' Nominal return or real? (Are you assuming an investment in fixed rate debt yielding '4%', held to maturity?) 'after rate change you still pay 5%' So the borrowing was at fixed terms. (Still assuming holding to maturity?????) 'but you earn 7%' Eh? So far all you've postulated is an investment in a vehicle yielding '4%'. If you are not holding the investment to maturity, then it's market value would fall in a rising rate environment. even if you are holding to maturity, you have a negative 1% annual carry cost.