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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (45117)	11/5/2008 3:03:11 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71406

Potential arbitrage trade. Buy Royal Bank of Canada Preferred shares RY.PR.W preferred. They are due for redemption in 2010. Given that interest rates will potentially fall in the next few months as the economy goes into a recession, these preferred shares should be redeem at the takeout price of $25. In the meantime collect better than 6 percent in dividend payments. Note that these shares are non-cumulative. The chance of the bank not paying the dividend are slim right now as it will impact their credit rating in a dramatic fashion. The economy has be in an extreme recession for that to happen and chance are the shares will be redeemed first in order to reduce carrying charges.