Sunday, April 22, 2007

Cash

The term "cash" is used to mean various things, other than currency.

1) Any money market-eligible bond, such as T-bills, commercial paper, and agency discount notes. If a mutual fund manager says s/he has 5% in cash, they generally mean these types of bonds.

2) Term for settling a bond on the same day as the trade. Normally corporate and municipal bonds settle in 3 days and Treasuries and Agencies settle in 1 day. A cash settle happens the same day.

3) Term to differentiate between a traditional security and a derivative.

Example: Alltel cash is outperforming CDS today as LBO rumors are growing. (Translation: traditional Alltel corporate bonds are performing better than credit default swaps in the name in the face of LBO stories. This would most likely be because of speculation that the cash bonds would be tendered.)

Example: In Treasuries, Asia came in for $10 billion in the cash market today. (Translation: There were buyers of $10 billion of Treasury bonds out of Asia. They were not buying in the futures market.)

2 comments:

Anonymous said...

My name is Monica Smith I was browsing internet and found www.blogger.com. The author did a great job. Thank you for your contribution. payday loan online payday loan

Liz said...

Hello .. I am truly grateful with those responsible for creating this blog, reading is something that I enjoy very much, for this reason, I have a habit to read articles like this every day. The theme was really interesting, as the content. Some time ago I attended a conference called guanacaste costa rica real estate, this conference was very creative, and also developed similar themes to those discussed on this blog.