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Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously
complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.
The first thing to
understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you
don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest
of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills
like a good human being. That's called collateral.
CDOs are one flavor of an entire sector of investing called structured
finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases,
a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards,
auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the
backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.
To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.
You could invest in the lowest risk tranche of the CDO, which would
provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds
and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong,
you might lose the entire investment.
CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance
companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.
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Monday, June 30, 2008
Amazon.Com Tops Consumer Reports' Latest Appliance Store Ratings
Comtex
YONKERS, N.Y., June 30, 2008 /PRNewswire via COMTEX/ ----Independent stores outscore all major retailers in overall experience
YONKERS, N.Y., June 30 /PRNewswire-USNewswire/ -- Amazon.com topped Consumer Reports' latest ratings of appliance stores in the small appliance category for the third year in a row. Independent stores followed closely behind, and topped CR's ratings for customer support.
For major appliances, Abt Electronics, of Glenview, Ill., earned high marks, including the highest marks for selection.
As part of the Consumer Reports annual Kitchen Guide, available in the August issue of CR, more than 20,000 subscribers reported on their experiences purchasing upwards of 35,000 household appliances.
Amazon.com was the readers' choice for small-appliance price and selection. It has won a following for offering free shipping on small appliances not sold through partners. For major appliance purchases, Abt Electronics earned high marks for selection and they ship many items for free. But when it came to service and support of appliances, independent stores outscored all major retailers and manufacturers.
"These reader experiences show that the odds of getting helpful customer support can vary significantly, depending on where you shop," said Bob Markovich, home and yard editor, Consumer Reports. "They also show that independent stores can meet or beat the big-box chains when it comes to product selection."
The full report and Ratings are available in the August 2008 issue of Consumer Reports, on sale July 1 wherever magazines are sold and online at www.ConsumerReports.org. The kitchen package also features expert advice on picking countertops, flooring, cabinet upgrades, refrigerators, cooking appliances, dishwashers, and tips on where to buy appliances.
Other highlights of CR's survey include:
-- Lowe's edges out Home Depot. While neither stood out for product support Lowe's generally outscored Home Depot for product selection and shopping ease. -- Mixed results for Sears. While respondents overall were very satisfied, Sears alone scored below average for its major-appliance pricing, despite a price-competition guarantee. -- Premium products, same support. General Electric stood out for customer support on its Web site, but scored average at solving problems. Problem solving was similar for GE's high-end Monogram appliances. Service calls go through personnel trained on all GE lines. -- Low marks for Maytag. Maytag, acquired by Whirlpool in 2006, earned among the lowest scores when it came to dealing with real-life complaints
Best Ways to Buy
Good prices determined where CR survey respondents bought major appliances for about half of all purchases. Consider these additional strategies:
-- Study the Market - Almost all survey respondents who read product reviews, browsed in stores, or visited relevant Web sites found the time they spent at least somewhat helpful. -- Time Major Purchases - September and October offer price breaks on cooking appliances as retailers try to free up floor space for new models. The same goes for refrigerators in May, and sales after the winter holidays are common. Shop for a major appliance when the store is the least crowded - weekdays or early on weekends. -- Plumb for Deals - Look for rebates, coupons, and related discounts in store and online. Weeks before a planned purchase, sign up on a store's Web site to receive e-mails with promotional offers. Compile a list of choices from a manufacture's Web site prior to hitting the store. -- Skip the Extended Warranty. In general, Consumer Reports finds extended warranties to be a bad deal for the customer. CR's reliability surveys have found that most appliances do not break during the extended warranty period.
The quality of a company's repair service and warranty were top criteria for retailers for fewer than ten percent of respondents. But many scorned customers don't hesitate to post their fury on the Internet. Built into the price of any appliance is the cost to support that product over its expected working life. Check Consumer Reports' ratings to see how retailers and manufacturers score for service and support.
In addition, CR's experts recommend doing homework before contacting the company for repairs by reading the manual's troubleshooting section and also checking the manufacturer's or retailer's Web site for frequently asked questions and other guidance.
AUGUST 2008
(C) Consumers Union 2008. The material above is intended for legitimate news entities only; it may not be used for commercial or promotional purposes. Consumer Reports(R) is published by Consumers Union, an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. To achieve this mission, we test, inform, and protect. To maintain our independence and impartiality, CU accepts no outside advertising, no free test samples, and has no agenda other than the interests of consumers. CU supports itself through the sale of our information products and services, individual contributions, and a few noncommercial grants.
SOURCE Consumer Reports
http://www.ConsumerReports.org
Copyright (C) 2008 PR Newswire. All rights reserved
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