In support of Abenomics, the Bank of Japan this past Wednesday affirmed its own policies to buy long-term debt and securities.

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Mortgage REITs, which use short-term debt to buy longer-term mortgage securities, also are at the greatest risk if interest rates rise because that would increase their short-term borrowing costs and cut the value of the mortgage bonds that they hold, possibly resulting in losses and reduced dividends.

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Lynch defined net cash as cash and marketable securities minus long-term debt.

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To see the system at work, look at auction-rate securities, a sort of long-term debt invented in the 1980s.

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Hard-to-sell long-term securities had been bought with short-lived debt, which left borrowers vulnerable to a change in sentiment every time the debt fell due.

ECONOMIST: Risk and the new financial order

Green Tree Financial found itself in a life-threatening credit squeeze because the market had lost faith in its mortgage-backed securities and refused to refinance its short-term debt.

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"To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities, " the FOMC says, adding it will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.

FORBES: U.S. Economy

Much of the run-up came on anticipation of further buying of debt securities by the Federal Reserve in a bid to push down long-term yields, referred to as the third round of quantitative easing, or QE3.

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