well today is opening day of the contest.Already guests on CNBC are giving speculative ideas.One idea this AM was to buy the GM prefered stock{BGM}is one I know.these are traded on the NYSE.Many companies have issued these kind of securities.They are usually originally offered at a $25 face value with yield and maturity listed in the name .So the “bgm” was issued at a coupon of 7.375 and is redeemable in 2048.However doubts about gm’s survival have caused this security to trade at $4!!!.this produces a yield of around 30%.The guest felt if a bailout occurs these could triple.Prefered and bondholders dividend are paid first ,so these securities become valuable just on the news that GM is a “going concern”.I can say these traded at around $15 just a few months ago before GM cash situation worsened.Ford also has such securities..a symbol there would be FCZ.These are a interesting speculation in or out of the contest as the dividend IS still being payed…Using BGM as a example;the $ . 46 quarterly dividend will cover the stock price within 2 years!.The risk of course is a GM bankruptcy .One could argue of course if you would be better off trading the GM common; as it is a $3 stock.For GM common to go to $9 would seem less likely in the current car sales situation however.2008-11-17

Tags: new cnbc contest november 2008

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