In finance, market segmentation theory is the theory that short-term, medium-term, and long-term bonds have completely unrelated interest rates. In the same way that, if you have siblings who share the same DNA as you from the same parents, each of you should be treated differently, since y’all have very different personalities. Hopefully.
While it may seem intuitive at first glance that interest rates of all the types of bonds might be somehow interrelated, it makes more sense that they’re not...when you think of how different short-term and long-term investors act.
The short-term bond market is full of short-term investors (such as banks), which in aggregate have different interests and behaviors than long-term investors (such as insurance companies), who try to look the other way and just let their long-term bonds do their thang. While all bonds have yield curves, they’re all based on different players in different games.
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Finance: What is a Country Basket (Index...30 Views
Finance, a la shmoop. What is a country basket index fund?
All right we're picking daisies, marigolds, lilies so uh how do we [Pictures of flowers]
rephrase in Italian? Like, we want to fill a portfolio basket with just stocks [Pouring a glass of red wine]
representing the overall financial health of Italy. Is Italy healthy? While
they smoke a lot they drink a lot of wine they eat a bunch of pasta but there
always seems to be a woman from some small village who's celebrating her [Old woman at a birthday party]
117th birthday over there. Well a country basket is just an index fund of
stocks representing a country. Like we're doing Korea... South we're gonna have
in that basket dunno some Samsung, a load of Daewoo, a hunk of Hyundai and some [Company stocks being added to the basket]
nice barbecue on the side. That'd be our Korean country basket and it's a good
basket to fill if you're just bullish on a country but not really sure which
flower on which to place your bets. It's like instead of trying to decide between [The stocks in the basket turn into flowers]
roulette or poker or slots... Well you just buy stock in Las Vegas
Sands you know you bet on the entire casino, and bueno Fortuna you know good [Someone checking their cards in a casino]
luck there pal, doesn't the house always win? Yeah so why do people keep going there?...
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