Enough research will tend to support your theory. - Murphy’s Law of Research
Topics: public finance, municipal default
I finally know what distinguishes man from the other beasts: financial worries.
- Jules Renard
"Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young." - Henry Ford
Lots of people think rate models are the sole domain of astrophysicists who've gone through a career change. In this video, we break down the details of a simple but very powerful interest rate model that captures the fact that variable rates....well, vary. It's a companion to our Cashflow Model Example.xls and whitepaper on Interest Rate Models for Liability Management. Enjoy and let us know what you think!
Topics: interest rate model, financial model, SIFMA
Using SmartModels Stage III, this video is a case study in analyzing whether to issue fixed or variable rate debt, both with and without cash on the balance sheet serving as a natural hedge. We calculate Cash Flow at Risk (CFaR) for the VRDBs and then graph the tradeoff between average annual (expected) debt service and CFaR. In the "with balance sheet cash" case, an efficient frontier-esque chart results from showing an optimal amount of VRDBs to issue.
Topics: variable rate, CFaR, SmartModels Stage III
"If we don't change direction soon, we'll end up where we're going" - Professor Irwin Corey
"Don't ever get your speedometer confused with your clock, like I did once, because the faster you go, the later you think you are." - Jack Handey, Deep Thoughts
Topics: refunding, advance refunding, negative arbitrage, escrow
“I think the whole idea is to look for good ideas, be innovative. I was interested in things even if I didn’t have much to do with them. When I had a job to do, an assignment, I did things with it. I built a fire under it.” - Joseph Siegel, aka Mr. CUSIP
With Steve Jobs’ recent passing and new biography on the bookshelves it’s been nearly impossible to avoid learning something about the guy who completely re-engineered some pretty major markets: portable music player, cell phones, and now the tablet computer. The thing that has intrigued me as we wash in the continuous stream of Jobs exposure is how he seemed to successfully embrace a number of contradictions. A Zen student/philosopher but also tyrannical to the point of one former colleague suggesting he would’ve made an excellent King of France. He was solidly in the billionaires club yet lived in a very modest home that he often left unlocked.