Risk averse investors may prefer to limit their exposures to investment grade instruments, while risk seekers may aim for high yielding speculative securities
. The ratings allow investors to compare risk levels of composite securities and financial assets within their portfolio.
S&P and Moody's charged investment banks three times more to rate structured financial securities and other speculative securities
than it did to rate general obligation and revenue bonds, the suit says.
Amongst the issues that surfaced was the fact that AIG officials who had led the company astray, including those in London who had devised the CDS investment strategy as well as had speculated in billions of dollars of highly speculative securities
such as collateralized debt obligations secured by mortgages of dubious quality, were owed more than $100 million in bonuses.
Mitchell and Wilmarth, both professors of law at George Washington University, have also prepared a substantial introduction that places the crisis in the perspective of a gradual transition in the economy--from one resting on productivity toward one that rested on financial derivatives, speculative securities
, and an artificial housing boom.
financial structure from a system based on prudent bank lending to one based on highly speculative securities
However, when expectations for steadily appreciating speculative securities
dies down, we may very well see a wave of profit taking that gathers more momentum than the advance that brought us to our current highs.
"In that case, the boss was playing the speculative securities
game," Havard said.
When many investors seem to be betting on the short-term direction of speculative securities
, this is a good time to step back and put the current turmoil in perspective and apply the lessons learned from many years of studying the financial markets.
TOKYO, March 30 Kyodo A new bank inspectors' manual will bar banks from extending loans to finance speculative securities
and land deals, the chief causes of mammoth loans that went sour after the early 1990s burst of the asset-inflated ''bubble'' economy, according to a copy of the final version of the draft manual.
Some regulators appear to equate the risks posed by the standardized and highly controlled agency and government mortgage banking activities, with the risks posed by commercial lending, lending on raw land and speculative securities