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Essay / Research Paper Abstract
A 3 page review of a September 2009 article listing several lessons learned in the 2008 Wall Street meltdown. The article's author includes an explanation of bonds and their continued value in individual portfolios. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: CJ6_KSfinBonds.doc
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Unformatted sample text from the term paper:
Penelope Wang (2009) reviews the past year to identify "5 Lessons from the Crash" in the September 2009 issue of Money magazine. Conventional wisdom in the past has
been that bonds typically are more secure than stocks, which remains true even in the face of wrenching financial hits since September 2008. Bonds never have been without risk,
and that truth remains unchanged even after all the government bailouts, changes in financial markets and the rise of market uncertainty to new heights. Wang (2009) examines the changes
that appear to be rather permanent - at least as permanent as anything is in financial markets - to conclude that virtually all investments are riskier now than in the
past and that there are five leading lessons to be learned from the events of the past year. 2. Opinion/Analysis McGrath (2008)
reminds us of the basic operation of bonds. They are securities that can be traded in a manner similar to stocks, but whereas stock ownership represents a partial ownership
of the stock-issuing company, a bond is a form of loan to the organization. It provides for either fixed or variable-rate interest to the lender, and in the event
of the failure of the organization, bondholders will be acknowledged soon after commercial lenders. Wang (2009) writes, "In the wake of the crash,
you may have concluded that asset allocation - the traditional strategy of diversifying among stocks, fixed income, and cash-is a bust. After all, your U.S. and foreign equities and
all sorts of bonds lost money last year" (p. 78). She quotes MIT finance professor Andrew Lo, however, in assuring the reader that asset allocation not only still is
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