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With such enormous sums involved, every extra basis point on the interest rate the government pays could mean extra billions of dollars for the taxpayer.
Here is what he said:) If you listened to Eugene Fama and believed that markets are efficient, you wouldn't have invested in auction rate securities that claimed to be as good as cash, but which offered fifty extra basis points.
You wouldn't have invested in a Triple A rated mortgage-backed securities pool that said this is as good as Treasuries, but offered fifty extra basis points of yield.
This created a perverse incentive for commercial banks to accumulate the bonds of the weaker member countries, which paid higher rates, in order to earn a few extra basis points.
It seems like an under-explored area for prosecutors to investigate.Of course, we will never be finished assigning responsibility for the boom and bust until we figure out why so many investors were so desperate to get those few extra basis points of yield in the first place.
A bond investor with a duration target of around 7 (corresponding to the duration of a 10-year corporate bond) earned up to 50 extra basis points for buying a combination of 5-year and 30-year paper.
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So why not just find an account paying an extra 25 basis points over ableBanking's offerings, and then make a charitable donation yourself?
After all, if all banks had equal legal protection, investors would scour the continent in search of an extra few basis points; the flows could be destabilising.
That means I'm receiving an extra 250 basis points for taking the risk that KDB will default.
The airport bonds that are subject to the alternative minimum tax can yield an extra ten basis points or so to make up for that failing.
Bernanke's comments shaved an extra 10 basis points off the 10-year Treasury note's yield, said Tony Crescenzi, chief bond-market strategist at Miller, Tabak.
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