Current ratio =
Current assets / current liabilities
Systematic risk
PRIME Purchasing power Reinvestment rate Interest rate Market Exchange rate
***non-diversifiable
Measured by beta
Unsystematic risk
Diversifiable
Business and financial risk
GNMA vs FNMA/FHLMC
GNMA is guaranteed
Others you can get F’d out of your money
CMO Z tranche
Bears no coupon, most risk, receives cash flow after other tranches are satisfied
Risks associated with corporate and muni bonds:
DRIP Default Reinvestment Interest rate Purchasing power
Government bond risks:
RIP (no default or credit) Reinvestment Interest rate Purchasing power * no R w EEs and STRIPs
Government bonds you pay ——————- taxes
Federal