The News Tribune from Tacoma, Washington • 12

B-12 The News Tribune Tacoma Mon July 21 1986 Bond immunization: benefits ImWrzKd SttfiaWWr i ii Staff photo by DALE BLINDHEIM to reinvest at a higher rate That higher rate would offset the likely higher college costs due to the greater Inflation On the other hand if inflation and interest rates decline in the years ahead the family would be forced to reinvest at a lower rate But college expenses would also probably not rise as fast as originally expected and the required outlay would therefore be lower Despite the apparent attractiveness of bond immunization it has another major disadvantage besides the lack of liquidity For the debt instruments in the portfolio carry a large opportunity cost a measurement of the projected return against the return that could be earned from the highest-yielding alternative investment because of the long-term maturity structure The longer the term of the investment the greater the opportunity cost To minimize such opportunity costs as well as to further insulate the bond portfolio from fluctuations in the value of the principal the systematic application of financial options and futures can be used as a part of the boid immunization process These more speculative devices designed to bolster net returns might be particularly appropriate for higher net worth individuals For instance the holder of a bond portfolio could write a Treasury bond call or option to buy at a specified price within a specified time against the port-folia The price this holder got for selling the call as determined by market supply and demand forces might then offset the volatility risk if interest rates rise and the value of the portfolio declines and futures add quantum efficiency to your said Lapp whose company is a subsidiary of Advest Inc a securities firm based in Boston premium received compensates the individual for contracting to sell his bonds Since he had these obligations to begin with the premium increased total return and reduced Another technique in bond immunization might be the use of the newly developed futures contracts based on the Consumer Price Index and traded on the New York Futures Exchange But some experts in this field believe that those contracts have not yet built sufficient liquidity and should be avoided until they do The New York Times NEW YORK The current era of low interest rates and wide-scale expectations of a continuation of this trend has focused attention on an investment strategy known as bond immunization Long used by pension plans and now being utilized by a growing number of individuals bond immunization is the matching of bond maturities in income streams in accordance with an needs The strategy which-locks in a yield is designed to produce a defined set of benefits regardless of periodic interest rate fluctuations it means is immunizing your bond portfolio to your particular expectations for whatever time frame you have in said Sean Lapp director of futures and optima of Boston Security Counselors objectives of immunization are to satisfy liabilities reduce systematic risk and assure an aceptable rate of return It insulates your assets from market risk as much as Leonard Wissner chairman of Ward 4 Wissner Capital Management a New York money management concern said: idea of immunity is to remove uncertainty It provides the certainty that one would be able to meet obligations whether interest rates rise or fall in the future Obligations or liabilities of the investor can be guaranteed independent of any external factors in the investment environment" Wissner gave the example of a family with a newborn child that estimates a need for $12500 a year for four years or a total of $50000 to pay for the child's college education It might then purchase four zero coupon Treasury bonds that mature in 18 19 20 and 21 years respectively A zero coupon bond makes no periodic interest payments but is instead sold at a deep discount from face value The cost of these four bonds based on a compounded interest rate for such securities of 81 percent would amount to $10672 However by locking in this 81 percent rate the family could be exposed to an adverse situation if inflation and interest rates were to rise during this period to say 12 percent So an even more conservative approach might be to buy shorter-term Treasury bonds and thereby have the opportunity built for the Royal Thai Navy and the last major project for Tacoma Boat at Yard 3 on Commence A new gunboat for Thailand A Foss tractor tug towed the HTMS Sukhothai toward a drydock Sunday afternoon shortly after its launching at Tacoma Boatbuilding Co The 250-foot-long gunboat is the last of two Thai gunboats being ment Bay The bankrupt company will consolidate operations at Yard 1 on the Hylebos Waterway Siam Amway jumps from suds to phone legal services and are running ahead of that by 18 percent during the first nine months of the 1986 fiscal year Nicholson said With the legal service division apparently off to a good start Amway will be moving into the travel and automotive industries next Firms from those industries and others are seeking out Amway he said Looking back at the deal with MCI Nicholson said those opportunities started to come to us when we entered that first field of And slam dunked dunk Now Nicholson said businesses are lining up to be a part of the various industries Amway plans to market which includes legal financial auto and travel ser vices Nicholson the company's chief operating officer was in Sacramento recently recruiting distributors for its latest service-oriented marketing venture: the Ultimate Legal Network a prepaid legal service plan The idea of prepaid legal services which is growing in popularity is to bring affordable legal aid to the middle class It also provides a steady source of income for attorneys and marketers like Amway But what is Amway doing in the legal services business? Isn't its strong suit selling Zoom spray cleaner concentrate and Buff-Up furniture polish? Nicholson said Amway is the perfect vehicle for mass marketing legal and other services a fact that dawned on the company only recently we did is wake a sleeping Egypt on brink of Los Angeles Times CAIRO Egypt struggling economy stands at the brink of bankruptcy Revenue from virtually all of its sources of foreign exchange are falling and will be off by more than $1 billion in the coming year Western economists here say Egypt has been hard hit by the continuing slide in oil prices by a dramatic decline in revenue from tourism and money sent back by workers in the Persian Gulf states and by a recession that is causing a banking crisis as private-sector debtors default on loans At the same time payments on international loans incurred a decade ago are coming due Egypt's foreign debt is estimated at about $36 billion more than a quarter of giant" said Nicholson has an economy of scale that is not surpassed by any company in America realized we have this massive Amway network that could deliver not just (home care and personal) products to people but services as The machinery for a high-profile sales campaign for legal services appears to be with Amway The company now markets 300 products through about 750000 distributors in the United States and has two million distributors worldwide adds a broad appeal We can get into a program quickly and have the pick of the Nicholson said one case where big is The Ultimate Legal Network was launched only last month with California as the starting point Based in Ada Mich a suburb of Grand Rapids Amway is enjoying a resurgence in sales and after a decline in 1983 and flat sales in 1984 Sales were $12 billion in 1985 financial disaster it owed to the United States Servicing this debt will cost Egypt $35 billion this year substantially more than it receives in foreign aid The crunch is expected to come later this year when Egypt's available sources of foreign exchange will by most experts' reckoning not be enough to meet commitments Central Bank reserves currently total $1 billion enough to cover only six weeks of essential imports Predictions about the foreign exchange shortfall that Egypt faces this year range from a conservative $15 billion to as much as $5 billion if oil prices remain depressed a Western banker observed "this place is already a Limited nfipfy Tmbertmstmat umtmkr Inc MkniMDnkT By LARRY HICKS McClaichy News Service SACRAMENTO Amway executive William Nicholson is a former college basketball star who knows the value of one dramatic play So it was with that attitude that Amway a billion-dollar company known for marketing soap and other home-care products unleashed its legions of salespeople to sell long-distance telephone services for MCI In a year Amway sold 750000 subscriptions for MCI which then was struggling for footing in the deregulated communications industry The company's performance for MCI had far-reaching value setting Amway on a course of diversification that is changing its sudsy image and increasing its already impressive sales figures a few slam dunks people started saying these guys can play ball' said Nicholson a 1964 All-America at the University of Nevada Reno Foreign exchange NEW YORK (API New York foreign ex change rain for tradei of II million minimum: Fg ncurrency Dollar in in deHart fgn currency Frl Mon Fri 438 I 5584 MS Australia (Dollar) Austria (Schilling) c-Belgium (Franc) (Belgium (Franc) Britain (Pound) Canada (Dollar) Danmark (Krona) Finland (Mark) Franca (Franc Israel (Shekel) Italy (Lira) Japan (Yen) xMexico (Peso) Zealand (Dollar) 5340 Norway (Krone) 1334 14 14 1414 43 93 44 03 44 74 44 74 4447 4477 1 3744 13740 7 9000 7 9000 40400 4 0400 40014 4 0900 1 4905 14073 0370 0737 0273 0733 i 5000 moo 7770 7773 1743 1743 1441 4717 00004 00003 1447 00 1443 00 004437 004397 155 35 144 30 001400 001497 433 00 474 00 4340 10493 1 0497 1340 7 4740 7 4300 i-Philpmes (Peso) 00490 00491 70 100070 1000 Sweden (Krona) 1475 1434 7 0700 70100 Swilierlnd (Franc) SOU 4793 1 7700 1 7440 Grmny (Mark) 4497 4400 7 1J00 7 1330 The Federal Reserve Board's index ot the dollar was 109 37 Friday off 0 74 A year ago the index was 139 10 Pre-closing London prices as of 7 am PDT Metals NFW YORK (AP) Pittsburgh scrap steel No 1 heavy was quoted today in Iron Age at 473-474 Spot nonferrous metal prices Friday Aluminum 51 04 cents per pound NY Comex spot month closed Fri Coppur 444-44" cent a pound US dotfl notions Gold 4407 40 per ounce Handy A Mormon (only doily quote) Gold 4345 70 per troy ounce NY Comex spot month closed Fri Silver 44 075 per ounce Hondy A Hormon Silver 45 045 per troy ounce NY Comex spot month doted Fri Mercury 4740 00 4700 00 per 7 lb flotk New York Pletinum 4437 50-4447 00 domestic merchant troy ounce NY Shipping IN FORT Nesoc Bronce (Libenon-) Pierre County Terminol automobiles from Japan Neptune Diamond (Singaporean) Sea-il containers from the Far East Land Terminal ra ca Star Full (Liberian) Terminal 4 containers from end lor Japan Chadatte Meertk (Danish) Terminal 7 containers from and tor the Fer East Nouyu I Japanese) Blair Terminal logs for Jepon DUB TONIGHT ToNo (Peruvian) Terminal 7 discharging ere from South America DUB TUESDAY Portland (American) Sea-Land Terminal containers from and for Alaska PENNY STOCKS An Opportunity of the 80'i FOR YOUR FREE REPORT CALL BRIAN PETERSON 1-800-654-6097 IH CO Imrsfrnrni Hankers NAM a Learn how to run your business alMspeed Come to a seminar where NBI will unravel the truth about PC networking information with you at a seminar This is a seminar to teach you Not sell you You'll get new information New solutions and a realistic picture of the major PC networks available today We'll give you the advantages and disadvantages of the most popular networking systems And we'll answer all your questions NBI was one of the first companies to recognize that isolated PCs often cause as many problems as they solve So we took a long hard took at PC networking And figured out 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