They fail to grasp the potential benefits of a long-term fixed-rate loan because they do not understand risk properly.

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CBM, a consultancy, the main potential for online bond-trading is in fixed-income securities that are already fairly liquid: these (notably government bonds and blue-chip corporate bonds) are likely to become more liquid, and more keenly priced.

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"The potential impact is no smaller than the shift from fixed-line phones to mobile phones, " he said.

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"Investors are looking at this as an unlimited option trade with enormous potential gains, " said Andrew Chappell, head of European, African and Middle Eastern fixed-income trading and sales at Exotix, who says inquiries into the bonds have increased in recent days.

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Brad Hintz, an analyst at Sanford Bernstein, calculates a potential hit of 28% to Bear Stearns' 2008 earnings per share if income from fixed-income trading falls 20%, financial sponsor merger and acquisition dries up and it sees a 35% reduction in below-investment grade loans.

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