Quote Originally Posted by RMJH View Post
Good work Myles. Kinda confirms my highly unscientific instincts to stick to B.C.D's but also indicates might not be worth going beyond D2 though in practice supply is limited so you get what you can to some extent. Would be really interested to have the standard deviations for the default rate estimates from Harmoney. Could flex the default rates +/- 50% (though suspect more downside than upside at this point in the cycle)and see what returns that yields...
No. The second default table is already included in the first annual rate of return table. So if Harmoney's estimates are correct, it is still better to invest in the more risky D to F as the returns are in the 14 to 15%. However, Myles' working is based on an even spread of defaults. So the actuals will be a bit different.