Day 2

I again arrived at Mr. Dorflinger's house at nine a.m, and today he really let me spend much of my time working and reading on my own. I first finished reading the corporate debt section I started yesterday, asking Mr. Dorflinger for help with understanding parity prices concerning subordinate debentures. After a long help session I fully grasped the concept of parity prices and how they change depending on the current price of the common stock as well as the current price and par value of the debenture. Once I completed the corporate debt section, it was a perfect stopping point for lunch. After lunch I moved on to another form of debt called money market debt. Money market debt functions differently than corporate debt because it only trades in short term financial instruments called papers. Banks are the primary buyers and traders of this security because it is too expensive for individuals to buy. When I was finished with money market debt I moved on to my last unit for the day, equity. Equity is made up of three parts; common stock, preferred stock, and special securities and financial listings. The equity unit was by far the smallest and easiest unit to understand. Tomorrow I plan to return to the debt section and learn about government debt.