The auction rate securities market imploded in mid-February, 2008. Auction rate securities are debt instruments most commonly issued by municipalities, governmental agencies, student loan organizations, or closed-end mutual funds as preferred securities. Auction rate securities are long-term bonds for which the interest rate was regularly reset at auctions held every seven, fourteen, twenty-eight, or thirty-five… [Read More]
Reverse Convertibles: A Structured Product Disaster for Investors
Reverse convertibles are a type of structured product designed and sold by securities brokerage firms and banks to investors looking for returns higher than those available from other fixed income investments. A reverse convertible is basically a combination of an unsecured short-term note and a put option. The interest rate on the short-term note, typically… [Read More]