The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter X. The bond market

Collection:: Economics Books

THE BOND MARKET 25Q However, it is a complete fallacy to think that bonds are not the objects of speculation, or that they are immune from speculative forces. Whenever the payment of interest or prin- cipal on a bond issue becomes really doubtful, speculative factors enter its market, and trading in it tends to increase. Similarly, a sudden change in short-term money rates, by creating a greater disparity between themselves and prevailing bond yields, may impart speculative price changes to the bond market. Also, when a very large bond issue is floated, its dis- tribution, which may for the time being tax the resources of the market, may temporarily entail active trading and specu- lation. Moreover, when bonds are in the denomination of a foreign currency and marketed in America, any real disturbance in its foreign exchange rate with dollars may render such bonds active and speculative on the market. Convertible bonds may through their conversion privilege prove as speculative and active as the shares into which they are convertible. Finally, as economists have frequently pointed out and as many con- servative investors of pre-war Europe have learned to their cost, bonds by virtue of being a definite money contract may be profoundly depreciated in actual value by currency inflation or rising commodity prices, since in such cases the actual buying power of the money which they involve will be considerably diminished. We must not, therefore, consider that speculation is absent from or unnecessary in the bond market, but only that it is not present there as extensively as in the stock market. The New York Bond Market—The New York bond market consists in reality of three different parts; these some- times overlap and deal in the same bond issues, and sometimes maintain a distinct and exclusive character. The first section of the market exists between the underwriting and issuing houses and the investing public direct: its chief vehicle is the printed advertisements of new “offerings,” and in any given bond issue it dominates distribution as a rule only during the

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