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finance a la shmoop what is PERLS all right well there's the kind that comes

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in nuggets of wisdom the kind that sings and the kind you wear and none of them [Woman in a fancy dress]

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have anything to do with this kind of pearls, PERLS stands for principle

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exchange rate linked security right well what is it it's just a normal issue

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bonds that pays interest twice a year but whose yield is linked see the L

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there to a given foreign exchange rate the base currency in pearls is the US

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dollar but the interest rate paid is based on a foreign ie

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non US currency and the way that it's linked has a whole lot of flexibility in

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real life so we'll just go through one example here say a set interest rate is [Man discussing PERLS]

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five percent on a thousand dollar pearls if interest were paid in US dollars well

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then everything would be easy you just take grand times 0.05 and you get 50

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bucks twice a year and that's what you'd be getting as interest if you owned that

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pearls easy it's just a bond but it's a little different with the pearls in that [Person pushes Easy button]

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if interest is being paid well say in Euros for example and let's say the euro

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is trading at 80 cents on the US dollar or rather you can buy a euro for 80

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American cents while you'd be then collecting interest on that thousand [American coins and a 1 euro coin appear]

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dollar bond in euros in this case that is instead of five percent on the grand

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paid at 50 bucks well you'd instead get 60 euros because a single US dollar buys

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you 1.2 euros at this exchange rate moment in time and pearls can be set up

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in a variety of ways like the interest rate itself can fluctuate like you could

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get a fixed number of euros per thousand dollar bond issue or other currencies or

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other elements or securities that it could be linked to really complex and a

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north whole lot of study here in this video so what yeah sadly you can't pay [Shmoogle search bar appears]

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your interest in pearls of wisdom but you know what they say money can't buy

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happiness unless you have an Amazon Prime account and there's a half-off [Elderly woman talking to children]

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Memorial Day yeah you know a special discount that one's a freebie

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