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The standard economic response to your argument, I believe, would be that if this were a good idea, so many people would already have borrowed and invested that the lending rates would rise until it was no longer profitable to do what you suggest. The implication is that at the moment, the market predicts that you will at best break even, unless you have some special insight that the market at large does not have.
--Brian
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tyl24 wrote:
Short-term I would lose about 1-2% percent on the
borrowed fund but in the long-term I would gain 1-2% when I lock in a long-term bond that has a coupon rate that is above the borrowed rate. I don't see how bond would be a loser if interest rates goes higher since I will locking in a bond that yield a higher coupon rate then the borrowed rate. I don't think you undertsand much about what I said before and I don't think you understand about bonds very much. |
