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Topic 40: Types and Use of Investment Vehicles - 127 (3) Amortizing securities Amortizing securities make both interest and principal payments For example, mortgage-backed and asset-backed securities pay both interest and principal payments each month until maturity, when the entire principal is paid up (4) Sinking funds Sinking funds are a series of periodic payments to retire a portion of the bond issue prior to maturity either by using a random selection process (lottery) or through the open market (5) Call provision (explained under Topic 40, Section 4D) (6) Refundable versus nonrefundable bonds The act of issuing new debt and using the proceeds to retire old debt is called refunding This practice is common with bonds having high coupon rates during a time of low interest rates Nonrefundable bonds contain restrictions that prevent them from using proceeds from new debt to retire old debt A bond can be callable but nonrefundable F Different types of embedded options: An embedded option is a right of an issuer or bondholder as indicated in the bond indenture Embedded options play an important role in the valuation of bonds They affect the timing and magnitude of cash ows They also affect the rate of performance for a bond over time There are several embedded options that are granted to issuers and borrowers (1) Call provision (discussed under Topic 40, Section 4D) (2) Prepayment provision Prepayment provisions are common with amortizing securities Such a provision allows the borrower to prepay the loan balances before maturity It is commonly used with home mortgages and car loans (3) Accelerated sinking fund provision The accelerated sinking fund option allows the issuer to retire more bonds than required under a sinking fund (4) Put provision The bondholder has an option to sell the bonds back to the issuer for a speci ed price This is common when bonds are trading below par because of high interest rates If an investor anticipates rising interest rates, or wants to hedge against rates increasing, a put option may be an attractive investment (5) Conversion rights (discussed under Topic 40, Section 4C) 5 Promissory notes A These are documents signed by a borrower promising to repay a loan under stated terms B They are unsecured notes that can be of short- or long-term duration 6 Insurance-based investments A Guaranteed investment contracts (GICs), now called stable value funds, are securities sold by insurance companies primarily to pension plans They are called guaranteed investment contracts because the rate of return is guaranteed for a xed period of time (such as ve years) Returns for GICs are generally low because little risk is involved B Annuities are contracts issued by insurance companies that make regular periodic payments Annuities may begin now or may be deferred, beginning at some point in the future There are two general types of annuities: (1) xed annuities and (2) variable annuities (see Topic 29, (6) Settlement options) 7 Stocks A Common (1) Investors often try to match their nancial objectives with the particular characteristics of stocks (2) There are six categories of common stock.



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This is a lot of work just to calculate the price of an order Every time a customer logs on to see information about her order, three tables have to be navigated Thus, the data model itself has caused a problem that will affect performance and scalability One solution here is to denormalize the model by storing the calculated subtotal for every order in the ORDERS table For example:





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This shows that for the user named root the user ID is set to 0 (root user), the group ID is set to 0 (root group), the home directory is /root, and the shell for that user is /bin/bash. (We re using a shadow password file to store encrypted password data, so the password field here contains an x.) You can change the home directory or the shell used by editing the values in this file. A better way to change these values, however, is to use the usermod command (see the section Modifying Users with usermod later in this chapter).

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Although this is a replication of data, it's a value-added replication in the sense that it's a calculation on data in other tables The good news is that finding the order subtotal is much easier The bad news is that any changes to that order will cause the SUBTOTAL column to be updated However, this isn't that bad: Most orders are submitted and never changed Only the few that are updated require a recalculation, so the overhead is minimal When discussing denormalization, it's good to weigh performance against the risks of replicating data In terms of our priorities, there's no contest: It's obviously more important to be correct than fast From a performance standpoint, however, we want to reduce this effect For efficiency, it's generally acceptable to denormalize your model as necessary Note the key phrase "as necessary" I strongly advise you to first normalize and then denormalize This ensures that your model will be as space efficient as possible, with the exception of a few patches where you've traded space efficiency for performance Performance aside, there's no reason to denormalize, so we want to limit such changes As with many other things we've discussed, simpler is better, so we'll denormalize only when we really must Many designers denormalize their models after deployment, when working on a more optimized version of the server side of the application It's sometimes very difficult to know what data should be located with other data until the applications are written and an initial deployment phase has occurred In summary, denormalization can be a performance-useful and even reasonable technique if it's done correctly Here are some specific tips about denormalization, from a purely performance standpoint:

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equations are arranged for computation of the stationary values for balance quantities such as outlet humidity, outlet temperature and outlet loading of absorption component, and the Sauter diameter of the product. All mass fluxes entering or leaving both the fluidized bed and the bed mass are assumed to be initial parameters. It is possible to use the inverse simulation procedure to calculate initial conditions at given product parameters. The simplified balances are based on the continuous process with non-classifying particle discharge and feeding of external seeds. The following assumptions are added to the assumptions from Section 16.2.1: neglect of heat loss over the apparatus wall (adiabatic condition); no dust recycling; neglect of non-deposited spray drops (overspray), attrition, agglomeration and breakage; consideration of a momentary reaction of the sulfur dioxide with the film, which occurs at the wetted surface; a limitation of the conversion of the sulfur dioxide is evoked by the gas phase mass transfer and the mass transfer surface; neglect of the water content of the product and of the seeds; and the product temperature is equal to the gas outlet temperature.

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