EFTA00675765.pdf

From: Grace Reksten Skaugen <Grace@infovidi.no> To: Jeffrey Epstein Subject: Re: use this chart . Date: Sat, 05 Oct 2013 08:34:50 +0000 :-) Sent from my iPad Den 4. okt. 2013 kl. 14:13 skrev "Jeffrey Epstein" <e you get an A - income. to be precise howver , it also depends on after tax treatment of capital gains vs interest On Fri, Oct 4, 2013 at 7:57 AM, Grace Reksten Skaugen <Grace@infovidi.no> wrote: OK, so my question was simply if I expect I may have to sell before maturity and I expect interest rates to, say, rise, which of the two holdings should I choose? Given that the low coupon bonds will be subject to a greater loss in value I should choose the high coupon ones. But if I hold to maturity, there is no difference. (These expectations could, I guess with some risk, be used in interest rate anticipation swapping.) Thanks for clarifying! Grace :-) PS I think the last part of your email below may have gotten lost? From: Jeffrey Epstein Date: Mon, 30 Sep 2013 14:23:54 +0200 To: Grace Skaugen <grace@infovidi.no> Subject: Re: use this chart . I understand the question, the answer is dynamic. . lets assume from your question . intial offering . high coupons and low CANNOT be same quality. risk maturity,. as posed by your question. in the period before maturity, the bonds will slide along different curves. as per my chart. therefore measured prior to maturity , it will depend on the proportion of the coupon to the increase. ex . if two days after the purchase interest rates were to go up. the lower coupon bond would drop down more in price and then the high coupon. Therefor the question of which is better, must be asked with a time component. ie after two weeks which portfolio seems to do better marked to market. however if held to maturity, the capital appreciation would make up for the lower temp price.. and the yield to maturity , on both would still remain the same. a different combination of capital and interest. HOWEVER< by definition at the moment in time when you are measuring yield. if they are the same . their risk is also the same. just a different tax treamtent for capital gain vs interest income. if you want to On Mon, Sep 30, 2013 at 6:51 AM, Grace Reksten Skaugen <Grace@infovidi.no> wrote: Dear Jeff, EFTA00675765 I think our friend Terje can now add to this many titles that he deals in bonds.. Firstly, thank you so much for having me to your beautiful house and for the ride to the airport! Much appreciated. I have to say that I have smiled many times at the thought of the tiger and the dog. Together they are very funny! Bonds: So thanks to you I now believe that my long standing (probably stupid) question will be answered. Ref. your chart below: My SIMPLE question is about this scenario: - I have one million USD and you have one million USD and we both decide to buy a holding of bonds with the some rating (for the sake of argument) You buy bonds with a higher coupon, holding A I buy bonds with a lower coupon, holding B At the time of purchase holding A= holding B (USD 1m) The question: IF the interest rate scenario going forward is pointing UP or DOWN, will those two holdings not have a different value - at a given later point in time - depending on the development of interest rates (your chart)? So if I am very clever and guess correctly, I will prefer one holding before the other. Or, God forbid, if I KNOW the way rates will move.. (Your friend Larry had he gone down the other path?..) But theoretically there is no difference, and therefore they have the same price.. I think I am probably misunderstanding something here, but I am sure you will clarify it for me. Best, Grace 0 PS The enclosed scan is from when I originally posed the question, as a summer student at NYU. Before you extinguish the validity of the question, I will in defense, say that my finance professor then did not have an answer. :-/ (Maybe she did not really listen?) Fra: Terje Rod-Larsen [mailto Sendt: 30. september 2013 03:55 Til: tskaugenPonline.no. Emne: Fw: use this chart . EFTA00675766 From: Jeffrey Epstein [mailto Sent: Sunday, September 29, 2013 05:01 PM To: Terje Rod-Larsen Subject: use this chart . _„ lnline image 1 **************** ********* *********************** *********** The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of Jeffrey Epstein Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00675767 The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of Jeffrey Epstein Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of Jeffrey Epstein Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00675768