Story Paper

Finance allah shmoop What is a story bond Well once

upon a time there was a castle alone in the

kingdom of yield The princess wanted to pay on ly

five percent a year to rent that money She had

found just the right castle she wanted to buy She'd

been cutting her hair for decades and selling it on

c baii you know for the down payment But then

one day a socialist ogre came by and took all

of her money her belongings and her pink unicorn and

gave it all to the union elves So then the

troll family who had loaned her the castle loans grew

very nervous about her collecting the debts she owed them

Especially now that the socialist ogre had taken over her

castle and was kind of ruining it with the elves

partying down way too hard Well the troll family bonds

were backed by the value of the castle And the

family knew that even if the castle were completely ruined

by the trolls and the ogre and it turned to

rubble while the lands around it were worth five times

the bonds principle so is the bonds trading value had

come down from its thousand dollars a unit par value

to being offered it now only six hundred bucks investors

who realised the great value of the pink unicorn breeding

grounds around the castle wanted toe by that bond aggressively

at these prices Well the brokers who wanted to sell

the bond and make their nice commissions were only too

happy to tell and retail this complex story And in

fact this is the chances of a story bond that

is There is some explanation as to why the bond

is trading at some weird meaningful discount or premium toe

where it was originally offered or trading that is not

explainable by normal market conditions like fed fund rates changing

or inflation moving around or other broad based global debt

phenomena that would raise or lower the tides bringing up

or down all votes This is a story bond It

has its own unique story that has to be told

and retold like the bible again and again it's a

bond that has such a complicated random bizarre history behind

it that investors need tohave an endlessly long painful story

like this one told to them before they feel comfortable

Enough to risk their money on that bond And still

you know be able to sleep at night because well 00:02:22.805 --> [endTime] you know who doesn't love a good bedtime story