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Subject:  Learning attempts Date:  10/26/2002  6:34 PM
Author:  opentolearn Number:  5026 of 36613

I recently saw a couple of ads in ourlocal Los Angeles Paper and I would like your comments, (as I'm still struggling to learn).

Fed and State Tax Free -Coupon 4.50% - Cuppertino, Ca.2002, Refinancing Capital Imp. COP - Aaa/AAA rated, AMBAC INSURED:
Matures 7/01/24, yield to maturity 4.50% Priced at 100, callable 7/01/09 @$102 - $25,000 minimum.
the way I understand it, is even tho it's offered at par, the likelihood of it being called is low, and money would be tied up until 24 - not a good idea?

Fed Home Loan Bank (FHLB) bond S&P AAA rated
Coupon 6%, matures 10/30/17, yield to maturity 6%, priced at 100, callable 1/30/03 @ $100 - $50,000 minimum.
again at par but money tied up a long time

What other information should I be looking at. It was very helpful when you explained the difference between State obligation vs. Revenue.

I then went to CNN Money and looked up Bonds with AAA and maturities up to 2007. All of them were at a premium. I was looking for AAA only, as I want safety first, and I don't want to tie up money too long in this climate. This is a sample of what I found:

All AAA, quantities of 25.
Federal Housing.
Coupon 4.55 Matures: 9/17/04, Yield 2.06 LY 2.060 Price 104.575
Coupon 4.15 Matures: 4/26/05 Yield 2.44 LY 2.446 Price 104.095</t>

Federal Nat.Mortgage
<t> Coupon 6.40, matures 8/14/07, Yield 3.48 LY 3.48 Price 112.943</t>

questions: What's the difference between Yield and LY - they are both the same. Also the fact that they all are at a premium, does that mean when they mature the Yield is even less because they will be at 100 rather than the price purchased, or is that accounted for in the premium price

If you can educate me further I'd appreciate it. I'm not the quickest learner, but I do stick with it. thanks a bunch.

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