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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (41773)	12/29/2008 1:35:25 PM
From: gronieel	5 Recommendations Read Replies (2) \| Respond to of 42834

"...Is Kirk correct in saying that the pre-refunding means the bond-holder makes less money than planned? If so, does that mean that the state lowers the interest paid to the bond-holder, or is it just because the bond will be called and the interest rates the bond-holder will be able to reinvest at will be lower?..." Of course Kirk is wrong! Kirk originally said the bonds had been called which is totally false...they haven't. The state can't lower the interest rate on ANY bond...it's a contract and doesn't change one whit just because the bond has been pre-refunded. The bond pre-refunded bond will be called at the scheduled call date but the investor was well aware of this possibility when he purchased the bond. Kirk somehow implies that a 5yr CD would have been a "better" investment than a GO about which he knows absolutely nothing. How can he make such a silly assertion when he knows nothing about the terms of the obligation nor the investor's situation? Rank amateurism.