The document discusses the practical application of equity derivatives for corporates. It provides examples of how corporates can use equity derivatives such as options and warrants to hedge risks and raise capital efficiently. Specifically, it describes how Venfin used an innovative collar structure involving put and call options on Richemont shares to fund the purchase of a stake in Vodacom from Hosken Consolidated Investments. It also gives examples of how R&R Holdings used warrants on British American Tobacco shares to lock in returns and unlock value from its preference shares in BAT.
V 1.08 presentation short selling and fraud in bull marketsVermeille & Co
Short selling poses challenges for EU regulation as there is a tension between efficiency and fairness concerns. Short selling activism can increase market efficiency by helping to uncover corporate fraud and misleading financial practices through detailed reports. However, there is a cultural bias against short-term speculative trading in Europe. Regulation focuses more on short-term fairness than long-term efficiency, and market authorities have broad powers that can discourage short selling activism. The document discusses these issues and debates how to balance efficiency and fairness regarding short selling regulation.
This presentation summarizes the key aspects of a quota-share treaty. A quota-share treaty is a type of proportional reinsurance contract where the insurer and reinsurer share premiums and losses according to a fixed percentage. For example, a 60% quota-share means 60% of risks, premiums, and losses are ceded to the reinsurer, while the insurer retains 40%. Quota-share treaties are obligatory in nature and operate on a fixed percentage basis for every risk. They are well-suited for limiting risk and fluctuation, especially for young or developing insurance companies. However, quota-share treaties are also inflexible and do not allow for balancing of portfolios.
This document provides an overview of cat bonds, which offer an alternative capacity source for natural catastrophe insurance. Cat bonds transfer catastrophe risk to the capital markets through securitization. Since 1997, 141 cat bonds have been issued totaling $27 billion in risk limits. The market started growing significantly after major hurricanes and earthquakes in the 1990s. Investor interest continues to rise due to attractive yields and increased understanding of natural catastrophe risk. Cat bonds and other insurance-linked securities may prove useful for risk management in China and other parts of Asia in the future.
This document provides an overview of stockholders' equity, including paid-in capital and different types of stock issued by corporations. It discusses the formation of corporations and advantages/disadvantages of incorporation. It also covers key aspects of common stock, preferred stock, treasury stock, and stock splits. The slides define important terms, provide examples of accounting entries, and illustrate how different transactions affect stockholders' equity.
4th Chapter Financial maketing & servicesVenky Yadav n
Importance of marketing services.
What is logistics.
Functions of logistics management
Inbound v/s outbound logistics.
leasing.
Types of leases.
Advantages and disadvantages of leasing.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
This document discusses various types of off-balance sheet activities and the associated risks. It describes how special purpose entities were used by Enron to disguise debt through transactions with Citigroup and JPMorgan Chase. The Sarbanes-Oxley Act later imposed new disclosure requirements to provide a more comprehensive picture of companies' financial situations. Additionally, the document outlines specific off-balance sheet activities like reverse repurchase agreements, loan commitments, and letters of credit that can expose financial institutions to risks like credit, interest rate, and liquidity risks if not properly managed and disclosed.
The document defines various financial terms that emerged during the credit crisis such as "bear market", "bull market", "Chapter 11", and "credit crunch". It then lists the top six stocks to invest in across various industries including banking, telecom, information technology, real estate, automobiles, and media/entertainment. Key details provided for each recommended stock include its market capitalization, sales, profits, margins, and growth rates.
V 1.08 presentation short selling and fraud in bull marketsVermeille & Co
Short selling poses challenges for EU regulation as there is a tension between efficiency and fairness concerns. Short selling activism can increase market efficiency by helping to uncover corporate fraud and misleading financial practices through detailed reports. However, there is a cultural bias against short-term speculative trading in Europe. Regulation focuses more on short-term fairness than long-term efficiency, and market authorities have broad powers that can discourage short selling activism. The document discusses these issues and debates how to balance efficiency and fairness regarding short selling regulation.
This presentation summarizes the key aspects of a quota-share treaty. A quota-share treaty is a type of proportional reinsurance contract where the insurer and reinsurer share premiums and losses according to a fixed percentage. For example, a 60% quota-share means 60% of risks, premiums, and losses are ceded to the reinsurer, while the insurer retains 40%. Quota-share treaties are obligatory in nature and operate on a fixed percentage basis for every risk. They are well-suited for limiting risk and fluctuation, especially for young or developing insurance companies. However, quota-share treaties are also inflexible and do not allow for balancing of portfolios.
This document provides an overview of cat bonds, which offer an alternative capacity source for natural catastrophe insurance. Cat bonds transfer catastrophe risk to the capital markets through securitization. Since 1997, 141 cat bonds have been issued totaling $27 billion in risk limits. The market started growing significantly after major hurricanes and earthquakes in the 1990s. Investor interest continues to rise due to attractive yields and increased understanding of natural catastrophe risk. Cat bonds and other insurance-linked securities may prove useful for risk management in China and other parts of Asia in the future.
This document provides an overview of stockholders' equity, including paid-in capital and different types of stock issued by corporations. It discusses the formation of corporations and advantages/disadvantages of incorporation. It also covers key aspects of common stock, preferred stock, treasury stock, and stock splits. The slides define important terms, provide examples of accounting entries, and illustrate how different transactions affect stockholders' equity.
4th Chapter Financial maketing & servicesVenky Yadav n
Importance of marketing services.
What is logistics.
Functions of logistics management
Inbound v/s outbound logistics.
leasing.
Types of leases.
Advantages and disadvantages of leasing.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
This document discusses various types of off-balance sheet activities and the associated risks. It describes how special purpose entities were used by Enron to disguise debt through transactions with Citigroup and JPMorgan Chase. The Sarbanes-Oxley Act later imposed new disclosure requirements to provide a more comprehensive picture of companies' financial situations. Additionally, the document outlines specific off-balance sheet activities like reverse repurchase agreements, loan commitments, and letters of credit that can expose financial institutions to risks like credit, interest rate, and liquidity risks if not properly managed and disclosed.
The document defines various financial terms that emerged during the credit crisis such as "bear market", "bull market", "Chapter 11", and "credit crunch". It then lists the top six stocks to invest in across various industries including banking, telecom, information technology, real estate, automobiles, and media/entertainment. Key details provided for each recommended stock include its market capitalization, sales, profits, margins, and growth rates.
1-Organization of insurer
Consolidation means that the number of firms in the financial services industry has declined over time because of merger and acquisition.
Convergence means that financial institutions can now sell a wide variety of financial products that earlier were outside their core business area.
An effective organizational structure benefits a company by:
Responsibility
Authority
Accountability
Delegation
The Organization Chart :An organization chart also shows the company’s chain of command, or the structure of authority that flows downward in the organization from the higher levels to the lower levels.
Pyramidal Structure and Levels of Authority:The pyramidal structure illustrates that the authority in a company starts at the top with one person or a small group of people, Authority is then distributed through the chain of command to ever-larger numbers of people throughout out the company.
2- TYPES OF INSURERS ORGANIZATION
Insurance organizations are classified by basis of risk coverage [life, general,health, property, auto]. their agency system [independent, exclusive, direct selling]and formation from legal point of view – stock or mutual.
Stock insurers
Mutual insurers
Lloyd’s of London
Reciprocal exchanges
The document discusses interest rate risk and how interest rate swaps and futures can be used to hedge against it. Specifically, it notes that if interest rates rise beyond a fixed rate, firms will incur losses from interest rate risk. It provides an example of a TV firm that lends at a fixed 12% rate but borrows at a variable rate of LIBOR + 0.25%, exposing it to interest rate risk. The document states that interest rate swaps and futures contracts traded on exchanges through brokers can be used to hedge against the risk of rising or falling interest rates.
The document discusses various topics related to business borrowing and leasing, including different types of bonds, bond terminology, bond contracts, bond covenants, convertible bonds, private placements, project finance, leasing terms, reasons for leasing, and examples of operating and financial leases.
In this presentation we will deal with Insurance organizations, their operational structure, insurer’s function and key business terms used in this sector.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
Client presentation on the benefits of a SMSF and the process for a SMSF to use the borrowing rules to invest in property. Includes the different ways of getting property into a fund and how to finance them.
This document discusses the insurance industry and its components in Malaysia. It describes the key roles and functions of insurance agents, brokers, and various departments within insurance companies, including underwriting, claims, marketing, and actuarial. It also outlines some of the major organizations that regulate and represent different segments of the insurance sector in Malaysia, such as PIAM for general insurers, LIAM for life insurers, and MTA for takaful operators.
WARRANTY & INDEMNITY INSURANCE FOR FINANCIAL SPONSORSMichael Gottlieb
The document discusses warranty and indemnity (W&I) insurance, which protects buyers and sellers from financial losses arising from breaches of representations and warranties made during M&A transactions. It provides examples of how W&I insurance has been used on both sell-side and buy-side deals. Key benefits include allowing sellers to distribute deal proceeds without retaining funds in escrow, and enhancing a buyer's bidding position by accepting a lower warranty cap. The document also outlines what types of losses are covered and not covered by W&I policies.
1) The key to weathering market downturns is maintaining a balanced, diversified portfolio including both equities and bonds.
2) Bonds provide steady income, protect investment principal, reduce risk, and serve to stabilize portfolios during volatile markets.
3) While equities tend to offer higher long-term returns, bonds can help reduce risk and price volatility, so balanced portfolios including both asset classes have historically achieved only slightly lower returns with less risk.
1) The document discusses key concepts for capital investment decisions including determining relevant cash flows, computing depreciation, and methods for calculating operating cash flow.
2) It emphasizes that only incremental cash flows from accepting a project should be included in the analysis. Common types of cash flows are discussed.
3) Pro forma financial statements and tables are presented to illustrate how to project cash flows, capital requirements, and total cash flows for making the investment decision.
The document discusses various paintings related to honeymoons by different artists. It lists over 20 paintings with titles that include the word "honeymoon" such as Lord Frederick Leighton's "The Painter's Honeymoon", Dante Gabriel Rossetti's "King Rene's Honeymoon", and Marcus Stone's "The Honeymoon". The paintings depict couples depicted as newlyweds on their honeymoon in different settings and situations.
This document outlines 4 characteristics of a person of vision based on passages from 1 Samuel 14:
1. They are careful about who they share their vision with because some people may oppose it or question it.
2. They take action and get started on their vision while others talk, complain or rest.
3. They act regardless of fear and understand that with God's help, even just a few people can win a battle.
4. They recognize the power of teaming up with one other person, as two people working together can accomplish more than individuals working alone.
The Port of Halifax has the deepest container berths on the East Coast of North America, allowing it to handle the world's largest vessels. It offers direct shipping connections to more continents than any other Canadian port, and provides quick inland rail service to markets in the Midwest within 74 hours to Chicago. The port has advantages in terms of faster discharge times from European/Mediterranean/Asian ports and reduced dwell times compared to other East Coast ports in North America, allowing cargo to reach Midwest destinations like Toronto up to two days faster.
Strategies for Taking Charge of Your Life and Law PracticeCynthia Sharp
Cynthia Sharp presented strategies for lawyers to take charge of their lives and law practices. She discussed 10 power strategies to increase law firm profitability, 10 steps to client relationship mastery, and time-tested tools to increase productivity. Sharp also provided tips on building a business through networking and referrals, case management, financial goals, leveraging a strong team, standard operating procedures, and social media. She emphasized the importance of work-life balance and challenged attendees to take charge of their own economy.
This document discusses God's seal for survival during the end times. It explains that God is presently sealing his people to protect them during the time of trouble. The Holy Spirit accomplishes this sealing by writing God's law, including the Ten Commandments, on our hearts and minds. The Sabbath commandment, to keep the seventh day holy, contains God's name, title as Creator, and territory of heaven and earth, making it the seal of God's law. Keeping the Sabbath holy was part of God's original plan and shows we are worshippers of God. Jesus and the apostles kept the Sabbath, setting an example for Christians to follow. God is waiting to send Jesus until all his
The document provides a five-step approach for handling question and answer sessions: 1) listen to the entire question, 2) pause before answering, 3) credit the person who asked the question, 4) respond directly to the question, and 5) bridge the response back to the overall topic. It also offers additional tips such as asking people to stand when asking questions, having questioners write their questions down on paper, repeating the questions, and writing down questions that require further thought before answering. The overall aim is to provide a structured process for engaging with audiences and addressing questions in a clear and considerate manner.
This document lists the names of various contemporary landscape photographers and some of their notable works from 1904 to 2011. Some of the photographers mentioned include Ansel Adams, Albert Renger, Robert Doisneau, Bernd and Hilla Becher, Andreas Gursky, Edward Ruscha, Thomas Struth, Jean-Marc Bustamante, Stéphane Couturier, and Olivier Toussaint. The works listed span the 20th century and include photographs of landscapes, architecture, and roads.
Guia practica para la elaboracion de bibliografias estilo vancouverAbhel Calderon
Guía practica para la elaboración de bibliografía estilo Vancuver, enseña como citar y como colocar las referencias en la elaboración de un artículo científico.
1-Organization of insurer
Consolidation means that the number of firms in the financial services industry has declined over time because of merger and acquisition.
Convergence means that financial institutions can now sell a wide variety of financial products that earlier were outside their core business area.
An effective organizational structure benefits a company by:
Responsibility
Authority
Accountability
Delegation
The Organization Chart :An organization chart also shows the company’s chain of command, or the structure of authority that flows downward in the organization from the higher levels to the lower levels.
Pyramidal Structure and Levels of Authority:The pyramidal structure illustrates that the authority in a company starts at the top with one person or a small group of people, Authority is then distributed through the chain of command to ever-larger numbers of people throughout out the company.
2- TYPES OF INSURERS ORGANIZATION
Insurance organizations are classified by basis of risk coverage [life, general,health, property, auto]. their agency system [independent, exclusive, direct selling]and formation from legal point of view – stock or mutual.
Stock insurers
Mutual insurers
Lloyd’s of London
Reciprocal exchanges
The document discusses interest rate risk and how interest rate swaps and futures can be used to hedge against it. Specifically, it notes that if interest rates rise beyond a fixed rate, firms will incur losses from interest rate risk. It provides an example of a TV firm that lends at a fixed 12% rate but borrows at a variable rate of LIBOR + 0.25%, exposing it to interest rate risk. The document states that interest rate swaps and futures contracts traded on exchanges through brokers can be used to hedge against the risk of rising or falling interest rates.
The document discusses various topics related to business borrowing and leasing, including different types of bonds, bond terminology, bond contracts, bond covenants, convertible bonds, private placements, project finance, leasing terms, reasons for leasing, and examples of operating and financial leases.
In this presentation we will deal with Insurance organizations, their operational structure, insurer’s function and key business terms used in this sector.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
Client presentation on the benefits of a SMSF and the process for a SMSF to use the borrowing rules to invest in property. Includes the different ways of getting property into a fund and how to finance them.
This document discusses the insurance industry and its components in Malaysia. It describes the key roles and functions of insurance agents, brokers, and various departments within insurance companies, including underwriting, claims, marketing, and actuarial. It also outlines some of the major organizations that regulate and represent different segments of the insurance sector in Malaysia, such as PIAM for general insurers, LIAM for life insurers, and MTA for takaful operators.
WARRANTY & INDEMNITY INSURANCE FOR FINANCIAL SPONSORSMichael Gottlieb
The document discusses warranty and indemnity (W&I) insurance, which protects buyers and sellers from financial losses arising from breaches of representations and warranties made during M&A transactions. It provides examples of how W&I insurance has been used on both sell-side and buy-side deals. Key benefits include allowing sellers to distribute deal proceeds without retaining funds in escrow, and enhancing a buyer's bidding position by accepting a lower warranty cap. The document also outlines what types of losses are covered and not covered by W&I policies.
1) The key to weathering market downturns is maintaining a balanced, diversified portfolio including both equities and bonds.
2) Bonds provide steady income, protect investment principal, reduce risk, and serve to stabilize portfolios during volatile markets.
3) While equities tend to offer higher long-term returns, bonds can help reduce risk and price volatility, so balanced portfolios including both asset classes have historically achieved only slightly lower returns with less risk.
1) The document discusses key concepts for capital investment decisions including determining relevant cash flows, computing depreciation, and methods for calculating operating cash flow.
2) It emphasizes that only incremental cash flows from accepting a project should be included in the analysis. Common types of cash flows are discussed.
3) Pro forma financial statements and tables are presented to illustrate how to project cash flows, capital requirements, and total cash flows for making the investment decision.
The document discusses various paintings related to honeymoons by different artists. It lists over 20 paintings with titles that include the word "honeymoon" such as Lord Frederick Leighton's "The Painter's Honeymoon", Dante Gabriel Rossetti's "King Rene's Honeymoon", and Marcus Stone's "The Honeymoon". The paintings depict couples depicted as newlyweds on their honeymoon in different settings and situations.
This document outlines 4 characteristics of a person of vision based on passages from 1 Samuel 14:
1. They are careful about who they share their vision with because some people may oppose it or question it.
2. They take action and get started on their vision while others talk, complain or rest.
3. They act regardless of fear and understand that with God's help, even just a few people can win a battle.
4. They recognize the power of teaming up with one other person, as two people working together can accomplish more than individuals working alone.
The Port of Halifax has the deepest container berths on the East Coast of North America, allowing it to handle the world's largest vessels. It offers direct shipping connections to more continents than any other Canadian port, and provides quick inland rail service to markets in the Midwest within 74 hours to Chicago. The port has advantages in terms of faster discharge times from European/Mediterranean/Asian ports and reduced dwell times compared to other East Coast ports in North America, allowing cargo to reach Midwest destinations like Toronto up to two days faster.
Strategies for Taking Charge of Your Life and Law PracticeCynthia Sharp
Cynthia Sharp presented strategies for lawyers to take charge of their lives and law practices. She discussed 10 power strategies to increase law firm profitability, 10 steps to client relationship mastery, and time-tested tools to increase productivity. Sharp also provided tips on building a business through networking and referrals, case management, financial goals, leveraging a strong team, standard operating procedures, and social media. She emphasized the importance of work-life balance and challenged attendees to take charge of their own economy.
This document discusses God's seal for survival during the end times. It explains that God is presently sealing his people to protect them during the time of trouble. The Holy Spirit accomplishes this sealing by writing God's law, including the Ten Commandments, on our hearts and minds. The Sabbath commandment, to keep the seventh day holy, contains God's name, title as Creator, and territory of heaven and earth, making it the seal of God's law. Keeping the Sabbath holy was part of God's original plan and shows we are worshippers of God. Jesus and the apostles kept the Sabbath, setting an example for Christians to follow. God is waiting to send Jesus until all his
The document provides a five-step approach for handling question and answer sessions: 1) listen to the entire question, 2) pause before answering, 3) credit the person who asked the question, 4) respond directly to the question, and 5) bridge the response back to the overall topic. It also offers additional tips such as asking people to stand when asking questions, having questioners write their questions down on paper, repeating the questions, and writing down questions that require further thought before answering. The overall aim is to provide a structured process for engaging with audiences and addressing questions in a clear and considerate manner.
This document lists the names of various contemporary landscape photographers and some of their notable works from 1904 to 2011. Some of the photographers mentioned include Ansel Adams, Albert Renger, Robert Doisneau, Bernd and Hilla Becher, Andreas Gursky, Edward Ruscha, Thomas Struth, Jean-Marc Bustamante, Stéphane Couturier, and Olivier Toussaint. The works listed span the 20th century and include photographs of landscapes, architecture, and roads.
Guia practica para la elaboracion de bibliografias estilo vancouverAbhel Calderon
Guía practica para la elaboración de bibliografía estilo Vancuver, enseña como citar y como colocar las referencias en la elaboración de un artículo científico.
This document discusses a variety of topics over 12 paragraphs but does not provide enough contextual information or detail to create an accurate 3 sentence summary. The document would need to be more fully explained for its essential high level ideas and information to be concisely captured and presented.
This document discusses the importance and power of illustrations in lifting abstract ideas to positions of practical application. It recommends recognizing good illustrations, disciplining oneself to observe like a hunter, and writing illustrations down like a gunfighter. Some sources of good illustrations include the Bible, books, magazines, newspapers, bumper stickers, quotes, and stories.
This document provides guidance for an art project involving observational drawing and printmaking. It instructs students to choose complex objects to draw from observation using a viewfinder. It encourages experimenting with techniques like distortion and references well-known artists. It outlines developing initial sketches into a final printmaking or 2D art idea through half page thumbnail sketches. The document demonstrates example student work and provides structure for a final printmaking piece or 2D art work.
The document appears to be song lyrics from multiple songs. It includes the songs "Jambo Karibu Kwa Afrika", "Michael Finnigin", "Gonna Rise Up Singin'", "Life is a Highway", and "Play for Me a Simple Melody". The lyrics span different genres and styles, ranging from African music to folk songs to rock ballads.
This document provides outlines for 4 sample sermons, each following the same basic structure: a title, scripture text, thesis statement introducing 3 main points, with each point including an illustration, application, and call to action. The sermons address topics such as what is needed to share Jesus, reactions people may face for their faith, taking courage in storms, and characteristics of those Jesus calls to work for him.
This short document provides information about an Italian song titled "Ti Voglio Tanto Bene" from 1845-1894. The song is in Italian and translates to "Love you very much." No other details are given about the song or its composer.
Mutual funds pool money from individual investors to purchase securities like stocks and bonds. They provide benefits like diversification and lower costs than individual investors can obtain. The mutual fund industry has grown dramatically in recent decades as more households invest in mutual funds for retirement. However, the industry has also faced scandals involving late trading, market timing, and other conflicts of interest between fund managers and investors.
Derivatives and risk management made simpleMarjo Kaci
This document provides a summary of derivatives and risk management strategies for pension funds. It discusses how pension funds can use derivatives such as interest rate swaps, inflation swaps, and options to hedge against market risks like changes in interest rates and inflation. It also describes common methodologies for calculating market risk exposure, including gross notional exposure and global exposure as defined by the commitment approach outlined by ESMA guidelines. The document is intended to introduce UK pension funds to derivative instruments, the market and counterparty risks associated with them, and how to measure and apply risk methodologies to manage these risks.
H.R. Verbeek gave a presentation on ING Financial Markets and fixed income trading. He discussed ING's global presence and trading operations. He then covered various fixed income products traded including government bonds, corporate bonds, interest rate derivatives, and repos. Verbeek also discussed ING's role as a primary dealer, the financial crisis and its impact on markets, the European debt crisis, and challenges for the future of fixed income trading.
The document discusses various aspects of the financial system including:
1) Savings from consumers are channeled into businesses through financial markets, allowing companies to raise funds for investments. This process links savings and investment in the economy.
2) Companies use both debt and equity financing to raise funds for daily operations and large projects. Debt financing involves borrowing through bonds while equity financing involves selling stock.
3) Financial markets include capital markets for stocks and long-term debt, as well as money markets for short-term debt. Various entities like banks and brokerages facilitate the flow of funds through these markets.
This chapter discusses how financial institutions use derivatives such as forwards, futures, options, swaps, and credit derivatives to hedge or manage various financial risks. It provides examples of how forwards and futures contracts for bonds, currencies, and stock indexes can be used to hedge interest rate risk, foreign exchange risk, and general market risk. The chapter also explains how futures markets work and the advantages they provide over forward contracts, including greater liquidity, standardized contracts, daily marking to market, and not requiring physical delivery of the underlying asset.
FESE Capital Markets Academy - An introduction to derivatives &CCPsTracey Roberts
Derivatives are financial contracts whose value is derived from an underlying asset such as a stock, bond, commodity, currency or index. There are several types of derivatives including futures, options, forwards and swaps. Derivatives allow investors to hedge risk or speculate on market movements. They can be traded over-the-counter between two parties or on regulated exchanges which provides benefits like transparency, liquidity and reduced counterparty risk through central clearing. The main risks of derivatives include credit risk, market risk and operational risk.
This document discusses regulatory issues related to hedge funds. It provides background on hedge funds and raises questions in five key areas:
1) Defining hedge funds and whether a targeted regulatory approach is justified.
2) Assessing the systemic risks hedge funds may pose and whether more oversight of leverage and exposures is needed.
3) Evaluating hedge funds' impact on market efficiency and integrity, particularly around short selling.
4) Monitoring hedge funds' risk management and asset valuation processes.
5) Improving transparency around hedge fund activities and strategies.
The document seeks input from interested parties on these issues as European regulators review financial regulations in response to the financial crisis.
This document provides information about ANV Global Services Ltd., a specialty insurance company focused on M&A insurance solutions. It discusses ANV's history, operations in multiple countries, and financial ratings. The document then summarizes what a Warranties & Indemnities (W&I) insurance policy covers for buyers and sellers in M&A deals. It also outlines the underwriting process, required documentation, pricing factors, and recent CEE/CIS deals that ANV has worked on. The document concludes with an overview of the global M&A insurance market and contact information.
The document discusses the investment performance of the Legg Mason Capital Management Value Trust (LMVTX) mutual fund over a period of 15 consecutive years from 1991 to 2006. It notes that LMVTX outperformed the S&P 500 benchmark during this time period. However, from 2006 to 2009 during the global economic recession, LMVTX underperformed the S&P 500. The document analyzes the performance of LMVTX using various metrics such as Sharpe ratio to determine if it provided high returns with relatively low risk compared to the S&P 500.
The document summarizes three cases related to international finance:
1) The collapse of Baring Bank due to rogue trader Nick Leeson's unauthorized speculative trading which accumulated over $1.2 billion in losses. Recommendations include improved oversight and investigation of large funding requests.
2) The potential use of weather derivatives by an electric utility to hedge revenue from temperature dependent demand. A proposed weather swap with Enron is described.
3) The failed merger of Vivendi Universal and Seagram due to huge debt levels and poor cash management after Vivendi's acquisition spree in media and telecom.
Introduction ot Mangerial Finance - Chapter 3 by: Scott Besley & Eugene BrighamKenji Silavi
This chapter discusses the financial environment, including financial markets, institutions, and investment banking. It describes how financial markets facilitate the flow of funds from savers to borrowers through direct transfers, investment banks, and financial intermediaries. The chapter also explains the roles of investment banks in facilitating capital raising and secondary market activities, as well as the various types and roles of financial intermediaries. Finally, it provides an overview of international financial markets and how they differ from those in the United States.
This document discusses securitization in South Africa and provides context on key terms and entities involved in the securitization process. It explains that mortgages and other loans are typically originated by banks or other lenders then aggregated and packaged into securities that are sold to investors. Special purpose vehicles are established to purchase the loans and issue asset-backed securities. The process allows originators to sell loans and free up capital to issue more loans while investors receive interests in the cash flows from the underlying loans.
The document provides an overview of derivatives and risk management. It begins with definitions of key terms like yield curve, Eurodollar, and derivative. It then discusses how corporations and financial institutions use derivatives to hedge risks and speculate. Several high-profile disasters from improper derivatives use are summarized to provide lessons about risk management. The document also covers accounting and taxation issues related to derivatives as well as how effective risk management can help reduce a firm's cost of capital and increase expected cash flows.
The document discusses derivatives, including their growth and types. It provides examples of how derivatives like futures, forwards, options, and swaps work and how they can be used for hedging and speculation. The key types of derivatives are over-the-counter derivatives, which are privately negotiated between two parties, and exchange-traded derivatives, which are traded on organized exchanges.
Measuring the effects of deregulation in the banking sectorDr Lendy Spires
The document analyzes changes in the share portfolios of Belgian credit institutions following deregulation in the banking sector in the 1990s. It finds that the credit institutions significantly increased their shareholdings, with participations growing by 82% between 1993 and 1998 and representing three-quarters of their total portfolio by 1998, up from two-thirds in 1993. Most participations were in financial enterprises, both domestic and foreign. Holdings of non-financial shares also doubled but remained a small portion of around 9% of total portfolios. Participations in domestic non-financial firms held steady while foreign non-financial share holdings shifted from participations to investments and trading.
Measuring the effects of deregulation in the banking sectorDr Lendy Spires
This document analyzes changes in the share portfolios of Belgian credit institutions following deregulation that allowed them to invest in non-financial companies. It finds that while the total value of share portfolios grew 64% from 1993 to 1998, investments in non-financial companies remained modest at around 9% of total holdings. Most shares were held in domestic and foreign financial institutions, with little change over time. The results suggest Belgian banks have not fully utilized the new investment opportunities provided by deregulation.
The document discusses various objectives and functions of financial management. The key objectives are profit maximization and wealth maximization. It also discusses the changing role of financial managers in areas like raising funds, investment decisions, and understanding capital markets. Additionally, it outlines the interface of financial management with other functional areas like production, materials, personnel, and marketing departments.
On April 23, 2020, Franklin Templeton wound up six of its debt mutual fund schemes with a total investment of Rs. 26,000 crores. This caused turmoil among investors. The winding up means there will be no further investments or redemptions until holdings mature or are sold. Franklin Templeton faced large redemption pressures exacerbated by COVID-19, which compounded existing issues from the 2018 IL&FS crisis where Franklin Templeton had invested heavily. The company's investments in risky, low-rated, and illiquid bonds prevented it from meeting redemptions through conventional means, forcing the winding up.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
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The perfect Hedger and the Fox
1. THE PRACTICAL APPLICATION OF EQUITY DERIVATIVES FOR
CORPORATES
The perfect Hedger and the Fox
17 April 2013
Dr Antonie Kotzé
Financial Chaos Theory
2. Before I came here I was confused about the subject.
Having listened to your lecture I am still confused.
But on a higher level.
Enrico Fermi (1901-1954)
Niels Bohr
and
Albert Einstein
3. What’s in the 1997 Nobel prize?
Myron Scholes (1941 - )
Robert Merton (1944 - )
Fischer Black (1938 - 1995)
Along the way, it changed the way investors
and others place a value on risk, giving rise to
the field of risk management, the increased
marketing of derivatives, and widespread
changes in the valuation of corporate
liabilities.
The theory "is absolutely
crucial to the valuation of
anything from a company
to property rights“. In my
view, financial
economics deals with
four main phenomena:
time, uncertainty, options and
information.
William F. Sharp
4. What’s in it for corporates?
Derivatives expanded the
universe of
instruments available
for trading and
hedging
5. Corporates and equity warrants
Can corporates utilise
equity derivatives
effectively?
YES
Corporates as hedgers use derivatives
to reduce the market and operational
risks they are exposed to
Saggitarius A
7. Derivatives as simple diagrams
a future has unlimited profit potential, but such a
diagram also shows the potential losses
P/L
Short
Future
K K’
Long
Future
8. Options as simple diagrams
K
Long
Put
Payoff
K
Short
Put
Payoff
K
Short
Call
Payoff
K
Long
Call
Payoff
A payoff profile shows the payoff
that would be received if the
underlying is at its current
level when the option expires
10. Useful Diagrams
A payoff profile shows the payoff that would be received if the
underlying is at its current level when the option expires
It highlights the risks associated with the strategy in a simple
diagram: a future has unlimited profit potential, but such a
diagram also shows the potential losses
It is easy to work with payoff profiles - they are additive meaning
that we can add or subtract them from one another ---
useful in constructing more complex financial instruments or
strategies
11. The put and/or call strategy
Bullish Strategy
Buying just a call can be a strategy
The investor will profit from an
upward move in the underlying stock
price while having very little capital
at risk
Bearish Strategy
Buying a put is also a strategy
In general investors buy a put as a
hedge when they are long the
underlying stock
Albert Einstein
12. Share buybacks
Board decides to buy shares back if
share price goes below a certain level
Company writes OTM puts
Example: share price at 100, board
decides to buy shares if share price
dips below 90
Company receives premium income
Myron Scholes on the floor
of the CBOE
13. SENS Announcement
On 29 August 2002 Venfin (VNF) sent out a SENS
Cautionary announcement
Shareholders are advised that VenFin has entered into
discussions with Hosken Consolidated Investments Limited
regarding the proposed purchase of the latter's interest in
Vodacom Group (Proprietary) Limited. Accordingly,
shareholders are advised to exercise caution when dealing in
their VenFin shares.
14. Financial Engineering
On 9 September 2002 VNF sent out a further SENS
VenFin has acquired a put option from Merrill Lynch
International (MLI) in respect of 51 858 000 Richemont
depositary receipts held by VenFin;
and MLI has acquired a call option from VenFin in respect of
51 858 000 Richemont depositary receipts held by VenFin.
15. The Vodacom Connection
On 16 January 2003 VNF sent out a further SENS
Announcement regarding exercise of the put option acquired
from Merrill Lynch International ("MLI")
The total cash proceeds realised by VenFin as a result of
exercising the put option are R945.2 million. The proceeds
from the exercise of the put option were used in part to settle
the purchase price of the 1.5% interest in Vodacom Group
(Proprietary) Limited ("Vodacom") acquired from Hosken
Consolidated Investments Limited.
16. An Innovative Funding Strategy
Speaking on Classic Business David Shapiro said the financing
arrangement was called a collar and involved Venfin putting up the
shares as security for a loan from Merrill Lynch.
Shapiro described the arrangement as a “new, innovative way in
which to loan money and to protect collateral”.
What happened here?
17. History
In 1993 the then Rembrandt Group invested R100 million into
Vodacom for 15% of the shareholding. Vodafone got 35% and
Telkom 50%
In 1995 Rembrandt sold 5% (1.5% from itself and 3.5% from
Vodafone) to HCI for R90 million – a BEE deal
It now bought that 5% stake back for R1.5 billion (again keeping
1.5% for itself and Vodaphone takes 3.5%)
RETURN!!
18. More History
Venfin inherited 2% of
Richemont’s share capital
when the Rembrandt Group
split into Remgro and Venfin
during 2000
Venfin used these shares in an innovative manner to fund the
purchase of HCI’s Vodacom’s stake
20. Venfin’s Ambitions
HCI has drawn loan funding from Venfin of some R600 million to
recapitalise e-tv
This loan was converted into equity and Venfin now indirectly
(through Sabido Investments) owns 33.1% of e-tv
Venfin enlarged their stake in Vodacom by, efficiently, using a non-
strategic investment
21. Why?
Simple solution could have been: sell shares at beginning of
the negotiations, put money on deposit and buy stake on
finalisation
Why through such a structure as described above?
Norbert Wiener
– Uncertainty regarding the outcome of
negotiations – if negotiations failed they did
not have to exercise option
– Richemont declared a dividend with LDT
date in this period – 27 Sep 2002
– Venfin kept all its share holder rights until
the deal was finalised on 31 Dec 2002
22. A Great Deal
Venfin received the dividend amounting to R17,076,839.40 (tax
benefit)
The strike of the put was at R18.22
On 31 December 2002 RCH price was R15.90
Venfin financed deal at R18.22
23. Corporate Warrants
Different to warrants currently traded on the JSE
Warrants traded on JSE issued by independent financial
institutions – no effect on issued share capital
Corporate/company warrants are issued by the company
itself on its own stock
If corporate warrants are exercised company receives cash
(company’s value increases) as well as the number of
shares on issue increases
24. Uses for Corporate Warrants
Cheap way to raise capital – receive premium now and
capital later
More certainty in capital raising program
Do not have to pay any dividends until warrants are
exercised
25. A History on Tabacco
In 1995 Rembrandt and Richemont consolidated their respective
tobacco interests in Rothmans International – the world’s fourth
largest cigarette manufacturer
During June 1999 Rothmans merged with British American
Tobacco Plc (BAT) to form the world’s second largest cigarette
producer
Remgro and Richemont’s investment in BAT is held through R&R
Holdings – Remgro and Richemont hold 33 1/3% and 66 2/3%
respectively
R&R owns 31.5% of BAT
26. Hedging using corporate warrants
R&R’s stake in BAT was split into
26.5% ordinary shares and 5%
preference shares with embedded
put options at a strike of 675p
The preference shares amounted
to some 120.9 million shares
The put options expire on 7 June
2004
The preference shares
automatically converted into
ordinary shares on a one to one
basis on any sale to a third party
R&R wanted certainty on the
optionality
The Manhatten Project: Niels Bohr, Robert
Oppenheimer, Richard Feynman, Enrico Fermi
Source: SENS
27. R&R’s Call Warrants on BAT
SENS Announcement on 11 December 2002
Compagnie Financiere Richemont SA (RCH) announces that its
subsidiary, R&R Holdings SA is to offer 120.9 million secured
European-style call warrants exercisable only upon maturity, at the
option of the warrant holder, into ordinary shares of British
American Tobacco p.l.c. (‘BAT’). The warrants, which will expire in
May 2004, are exercisable at 675p per warrant.
Remgro had a similar announcement
29. Lock in returns
In June 2004, R&R Holdings received
GBP 816 million, either upon exercise
of the warrants by the warrant holders
or through the redemption of the
preference shares by BAT
By issuing warrants R&R was guaranteed of GBP
816 million
R&R sold the time value and option rights
embedded in the synthetic call, unlocking value
early
Enrico Fermi
30. Corporate warrants, the LTCM and UBS way
Report: International Herald
Tribune, Saturday, September
26, 1998
Losses due to the failure of Long Term
Capital Management (LTCM):
Credit Suisse, Europe's sixth-biggest
bank - $55 million
Dresdner Bank - $142.6 million
Union Bank of Switzerland (UBS – the
world’s second largest bank) - $682
million
What happened?
31. A convenient deal
LTCM was on the crest of the wave
LTCM and UBS had complementary
goals:
UBS wanted to buy a significant
stake in the fund, and LTCM partners
wanted to convert foreign interest
income from their off-shore hedge
fund into capital gains and defer it
for 7 years
Income from LTCM flows directly to
the partners in the form of short-
term profits or interest and
dividends, which are taxed at 39.6
percent. Long-term capital gains, by
contrast, are taxed at 20 percent.
UBS wanted a structure that looked more like an option than a
loan, turning any income into a capital gain, and they wanted an
opportunity to invest directly into LTCM.
32. A Tax Deal
The deal solved a tax problem faced by LTCM and other hedge
funds: most funds are set up as partnerships or limited liability
corporations
Income from the fund flows directly to the partners in the form
of short-term profits or interest and dividends, which are taxed at
39.6 percent. Long-term capital gains, by contrast, are taxed at
20 percent.
33. UBS: the deal
For a premium of $300 million UBS sold to LTCM
a seven-year European call option on 1 million of
LTCM's own shares, valued then at $800 million.
To hedge the position UBS bought $800 million
worth of LTCM shares.
This transaction was completed in three
tranches in June, August and October 1997.
UBS also invested $300 million directly in LTCM
i.e., the premium. Such an investment had to be
held for a minimum of three years.
Any shares sold by UBS had to be converted
into a loan at par value
UBS booked an estimated $30 to $50 million
profit up front
The deal was a variation on other attempts to
turn hedge funds into a securitized asset class
with a protected downside. UBS was protecting
the downside.
Enrico Fermi
34. The Premium
The deal was calculated so that the $300 million
premium was equivalent to a coupon of Libor
plus 50 basis points over the seven years.
35. A Clever Deal
LTCM secured $800 million new investment capital at
Libor plus 50 basis points. It had a call on all returns
above that level.
UBS gets its capital back after 7 years by selling the
shares at the strike price
UBS's obligation, to convert any shares it wanted to sell
into a loan, provided LTCM with a synthetic seven-year put
on its own performance.
37. UBS’s risk management
Hedge fund shares are not liquid
When Russia defaulted on loans
in 1998, liquidity dried up
UBS could not delta hedge its
short synthetic put by selling
LTCM shares
LTCM’s share price collapsed and
UBS lost $682 million
UBS’s risk
managers never
considered the
possibility of a
collapse of LTCM
38. Hedgers and foxes
Equity derivatives can be used
effectively by corporates to
hedge certain contractual
liabilities
Understand the risks involved
39. Contact and Disclaimer
Dr Antonie Kotzé
Email: antonie@quantonline.co.za
Phone: 082 924-7162
Disclaimer
This article is published for general information and is not intended as
advice of any nature. The viewpoints expressed are not necessarily that of
Financial Chaos Theory. As every situation depends on its own facts and
circumstances, only specific advice should be relied upon.