Reference government bond

The most actively traded government securities for various maturities are called benchmark issues. Yields on these issues serve as reference interest rates which are used extensively for pricing other securities. Exhibit 1.2 is a Bloomberg screen of the benchmark bonds issued by the government of the Netherlands. European government bonds will be discussed in Chapter 5. As an illustration of a corporate bond. Exhibit 1.3 shows a Bloomberg Security Description screen for 4.875% coupon bond issued by Pirelli SPA that matures on 21 October 2008. 

As a point of reference for the proportions of corporate and government bonds in the portfolio, historical data are analyzed. An ex post simulation examines how the risk/return relation of a mixed portfolio would have developed in the past. The (expected) return of a mixed portfolio is made up as follows ... 

After assessing a bond with the help of credit analysis, the question arises to what extent the market price of this bond corresponds with the investor s judgement. The market price should compensate the investor for all risks connected with holding the bond. This market price (spread) is often referred to as the return differential between the analysed bond and the benchmark. Frequently, government bonds or the swap rate with matching maturities are used as benchmarks. Another standard reference are bonds of other issuers that are active in the same business field. Since one debt instrument is assessed relative to another debt instrument, this analysis is also called relative value analysis, the basic principles of which are described in this section. 

A constant maturity swap, or CMS, is a basis swap in which one leg is reset periodically not to LIBOR or some other money market rate but to a long-term rate, such as the current 5-year swap rate or 5-year government bond rate. For example, the counterparties to a CMS might exchange 6-month LIBOR for the 10-year Treasury rate in eflFect on the reset date. In the U.S. market, a swap one of whose legs is reset to a government bond is referred to as a constant maturity Treasury, or CMT, swap. The other leg is usually tied to LIBOR, but may be fixed or use a different long-term rate as its reference. 

To gain exposure to sectors where, for various reasons, they do not wish to make actual purchases, investors can use a variation on a TR swap called an index swap, in which one of the counterparties pays a total return tied to an external reference index and the other pays a LIBOR-linked coupon or the total return of another index. Indexes used include those for government bonds, high-yield bonds, and technology stocks. Investors who believe that the bank loan market will outperform the mortgt e-backed bond sector, for instance, might enter into an index swap in which they pay the total return of the mortgage index and receive the total return of the bank-loan index. 

Option-adjusted spread analysis uses simulated interest rate paths as part of its calculation of bond yield and convexity. Therefore an OAS model is a stochastic model. The OAS refers to the yield spread between a callable or mortgage-backed bond and a government benchmark bond. The government bond chosen ideally will have similar coupon and duration values. 

The concern of the government is to prevent tax-free industrial ethanol from finding its way into beverages. To achieve this end, the regulations call for a combination of financial and adininistrative controls (bonds, permits, and scmpulous record keeping) and chemical controls (denaturants that make the ethanol unpalatable). Regulations estabUsh four distinct classifications of industrial ethanol. The classifications with the most stringent financial and adininistrative controls call for Httle or no chemical denaturants. The classifications that call for the most effective chemical denaturants require the least financial and administrative controls. For a Hst of denaturants currently authorized, see Reference 284. 

When enantiomerically pure allyl p-tolyl sulfoxide is deprotonated and then treated with electrophilic 2-cyclopentenone, a conjugate addition occurs forming a new carbon-carbon bond with very high control of absolute stereochemistry (equation 25)65. See also Reference 48. Similarly, using more substituted enantiomerically pure allylic sulfoxides leads to virtually complete diastereocontrol, as exemplified by equations 26 and 27 the double bond geometry in the initial allylic sulfoxide governs the stereochemistry at the newly allylic carbon atom (compare equations 26 vs. 27)66. Haynes and associates67 rationalize this stereochemical result in terms of frontier molecular orbital considerations... 

Caryophyllenes, as an example of two naturally occurring isomeric sesquiterpenes containing a medium-sized ring, in which the success of the total syntheses lies in the stereoselective control of a chiral centre, in a common synthetic key intermediate, which governs the configuration (JE or Z) of the double bonds present in each one of the two isomers. In this context, a brief reference to Cecropia Juvenile Hormone synthesis by the Syntex group, as well as to Johnson s cationic cyclisation of unsaturated polyolefins to fused polycyclic compounds, is made. 

The shape of a molecule or ion is governed by the shape adopted by its constituent atoms. In PHj, for example, there are four electron pairs, but three of them are bonded pairs and one is a non-bonded pair. The four electron pairs adopt a tetrahedral shape but the three bonded pairs adopt a pyramidal shape. So the PHj molecule is described as pyramidal, not tetrahedral. As the base of this pyramidal structure is triangular rather than, say, square, the shape is more correctly referred to as trigonal pyramidal. 

Mineral segregation in industry relies heavily on the selective adsorption of macromolecules onto the surfaces of those minerals that have particular industrial applications. This selectivity is governed mainly by the surface chemistry of the mineral and the type of polymer used as a flocculant. " Effectiveness of flocculation depends upon the charge, concentration and molecular weight of the polymer, and also the pH and salt concentration of the clay suspension. The bonding between the anionic flocculant polyacrylamide (PAM) and clay mineral surfaces has been effectively reviewed recently by Hocking et al and the reader is referred to this should they require an in-depth literature review. For more information on general colloidal chemistry of clay suspensions the reader is referred to the review of Luckham and Rossi." ... 

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