Tomas Björk
- Published in print:
- 2004
- Published Online:
- October 2005
- ISBN:
- 9780199271269
- eISBN:
- 9780191602849
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199271267.003.0001
- Subject:
- Economics and Finance, Financial Economics
This introductory chapter starts off the discussion on financial derivatives by explaining the European call option. It formulates the two main problems that will be the focus of the entire volume: ...
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This introductory chapter starts off the discussion on financial derivatives by explaining the European call option. It formulates the two main problems that will be the focus of the entire volume: What is a “fair” price for the contract? How does one protect (hedge) against the financial risks resulting from the sale of a derivative? The definition of financial derivative is then presented.Less
This introductory chapter starts off the discussion on financial derivatives by explaining the European call option. It formulates the two main problems that will be the focus of the entire volume: What is a “fair” price for the contract? How does one protect (hedge) against the financial risks resulting from the sale of a derivative? The definition of financial derivative is then presented.
Sharan Jagpal
- Published in print:
- 2008
- Published Online:
- September 2008
- ISBN:
- 9780195371055
- eISBN:
- 9780199870745
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195371055.003.0022
- Subject:
- Business and Management, Marketing
This chapter shows how the firm can use marketing-finance fusion to evaluate mergers and acquisition strategies. It examines the potential gains from mergers, the history of mergers and acquisitions, ...
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This chapter shows how the firm can use marketing-finance fusion to evaluate mergers and acquisition strategies. It examines the potential gains from mergers, the history of mergers and acquisitions, the effect of private equity firms and hedge funds on merger activity and merger performance, and the special problems posed by international mergers. In particular, it shows how buying and selling firms can objectively value brands by combining game theory and data from choice-based experiments.Less
This chapter shows how the firm can use marketing-finance fusion to evaluate mergers and acquisition strategies. It examines the potential gains from mergers, the history of mergers and acquisitions, the effect of private equity firms and hedge funds on merger activity and merger performance, and the special problems posed by international mergers. In particular, it shows how buying and selling firms can objectively value brands by combining game theory and data from choice-based experiments.
Sean McKeever and Michael Ridge
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780199290659
- eISBN:
- 9780191603617
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199290652.003.0006
- Subject:
- Philosophy, Moral Philosophy
This chapter argues that the bare possibility of moral knowledge in particular cases is already enough to ensure the availability of a certain sort of ‘hedged’ moral principle called a ‘default ...
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This chapter argues that the bare possibility of moral knowledge in particular cases is already enough to ensure the availability of a certain sort of ‘hedged’ moral principle called a ‘default principle’. Default principles are consistent with holism about reasons because they claim that a given action has a given moral property only if no further feature of the situation explains why it does not. One obvious worry about this proposal is that default principles are vacuous (trivially true). This worry bears interesting parallels to worries about ceteris paribus laws in science. It is argued that once default principles are properly understood, this worry is easily met. The key point is to distinguish there being an explanation for a moral property’s absence from its absence being explained by some feature of the situation.Less
This chapter argues that the bare possibility of moral knowledge in particular cases is already enough to ensure the availability of a certain sort of ‘hedged’ moral principle called a ‘default principle’. Default principles are consistent with holism about reasons because they claim that a given action has a given moral property only if no further feature of the situation explains why it does not. One obvious worry about this proposal is that default principles are vacuous (trivially true). This worry bears interesting parallels to worries about ceteris paribus laws in science. It is argued that once default principles are properly understood, this worry is easily met. The key point is to distinguish there being an explanation for a moral property’s absence from its absence being explained by some feature of the situation.
Sean McKeever and Michael Ridge
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780199290659
- eISBN:
- 9780191603617
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199290652.003.0007
- Subject:
- Philosophy, Moral Philosophy
This chapter argues against the hedged principles laid out in Chapter 6. It contends that the best explanation of the possibility of practical wisdom entails that morality can be codified. It gives ...
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This chapter argues against the hedged principles laid out in Chapter 6. It contends that the best explanation of the possibility of practical wisdom entails that morality can be codified. It gives three main arguments. The first argument contends that generalism as a regulative ideal better preserves a broad scope for practical wisdom than its particularist rivals. In pressing this argument, it is shown how generalism is better situated to accommodate an important role for certain kinds of fiction and narrative in moral thinking. The second argument contends that generalism as a regulative ideal is better situated to distinguish the a priori from the a posteriori elements of moral knowledge than its particularist rivals. The third argument simply appeals to pre-theoretical intuitions about the codifiability of morality.Less
This chapter argues against the hedged principles laid out in Chapter 6. It contends that the best explanation of the possibility of practical wisdom entails that morality can be codified. It gives three main arguments. The first argument contends that generalism as a regulative ideal better preserves a broad scope for practical wisdom than its particularist rivals. In pressing this argument, it is shown how generalism is better situated to accommodate an important role for certain kinds of fiction and narrative in moral thinking. The second argument contends that generalism as a regulative ideal is better situated to distinguish the a priori from the a posteriori elements of moral knowledge than its particularist rivals. The third argument simply appeals to pre-theoretical intuitions about the codifiability of morality.
D. Hugh Whittaker and Simon Deakin (eds)
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199563630
- eISBN:
- 9780191721359
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199563630.001.0001
- Subject:
- Business and Management, Corporate Governance and Accountability, HRM / IR
The chapters in this book address the state of Japanese corporate governance and managerial practice at a critical moment. They are based on detailed and intensive fieldwork in large Japanese ...
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The chapters in this book address the state of Japanese corporate governance and managerial practice at a critical moment. They are based on detailed and intensive fieldwork in large Japanese companies and interviews with investors, civil servants, and policy makers in the period following the adoption of significant corporate law reforms in the early 2000s up to the months just before the global financial crisis of 2008. At the start of the decade, the time seemed right for Japan to move to a shareholder value‐driven, “Anglo‐American” system of corporate governance. Instead, an adjustment and renewal of the postwar model of the large Japanese corporation has taken place. Japanese managers have adapted to and reshaped corporate governance norms, using them to reform internal decision‐making structures. The board's role is seen in terms of strategic planning rather than monitoring, and external directors are viewed as advisers, not as representatives of the shareholders. Companies have responded to the threat of hostile takeovers by putting poison pills in place and have rebuffed hedge fund activists' demands for higher dividends and share buybacks. Although shareholder influence is more extensive than it was, central aspects of the Japanese “community firm” ‐ in particular, managerial autonomy and a commitment to stable or “lifetime” employment for core of employees ‐ largely remain in place. The Japanese experience suggests that there are limits to the global convergence of company law systems, and that the widespread association of Anglo‐American practices with the “modernization” of corporate governance may have been misplaced.Less
The chapters in this book address the state of Japanese corporate governance and managerial practice at a critical moment. They are based on detailed and intensive fieldwork in large Japanese companies and interviews with investors, civil servants, and policy makers in the period following the adoption of significant corporate law reforms in the early 2000s up to the months just before the global financial crisis of 2008. At the start of the decade, the time seemed right for Japan to move to a shareholder value‐driven, “Anglo‐American” system of corporate governance. Instead, an adjustment and renewal of the postwar model of the large Japanese corporation has taken place. Japanese managers have adapted to and reshaped corporate governance norms, using them to reform internal decision‐making structures. The board's role is seen in terms of strategic planning rather than monitoring, and external directors are viewed as advisers, not as representatives of the shareholders. Companies have responded to the threat of hostile takeovers by putting poison pills in place and have rebuffed hedge fund activists' demands for higher dividends and share buybacks. Although shareholder influence is more extensive than it was, central aspects of the Japanese “community firm” ‐ in particular, managerial autonomy and a commitment to stable or “lifetime” employment for core of employees ‐ largely remain in place. The Japanese experience suggests that there are limits to the global convergence of company law systems, and that the widespread association of Anglo‐American practices with the “modernization” of corporate governance may have been misplaced.
John Buchanan and Simon Deakin
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199563630
- eISBN:
- 9780191721359
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199563630.003.0002
- Subject:
- Business and Management, Corporate Governance and Accountability, HRM / IR
This chapter presents an empirical analysis of the implementation of the “company with committees law” of 2002 that was aimed at expanding the role of independent directors. Most boards continue to ...
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This chapter presents an empirical analysis of the implementation of the “company with committees law” of 2002 that was aimed at expanding the role of independent directors. Most boards continue to have a significant executive presence and external directors are treated as advisers and associates rather than as monitors of management or as agents of the shareholders. However, there has been an increase in external directors across all companies (not just those opting into the new law), and a clearer separation between monitoring and execution. Because the core of the “community firm” appears to remain intact, the chapter interprets these developments as a renewal of the postwar model, stressing elements of continuity along with the adaptability of the Japanese corporation in the face of external pressures. A similar conclusion is reached concerning the limited impact on managerial practice of growing shareholder engagement, including recent instances of hedge fund activism.Less
This chapter presents an empirical analysis of the implementation of the “company with committees law” of 2002 that was aimed at expanding the role of independent directors. Most boards continue to have a significant executive presence and external directors are treated as advisers and associates rather than as monitors of management or as agents of the shareholders. However, there has been an increase in external directors across all companies (not just those opting into the new law), and a clearer separation between monitoring and execution. Because the core of the “community firm” appears to remain intact, the chapter interprets these developments as a renewal of the postwar model, stressing elements of continuity along with the adaptability of the Japanese corporation in the face of external pressures. A similar conclusion is reached concerning the limited impact on managerial practice of growing shareholder engagement, including recent instances of hedge fund activism.
Alan D. Morrison and William J. Wilhelm Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.003.0010
- Subject:
- Economics and Finance, Financial Economics
This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. ...
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This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. The major investment banks are getting bigger and bigger. Their work is increasingly codified and, as a result of legislation like the Sarbanes Oxley Act, is increasingly regulated. It is argued that these trends have encouraged the development of smaller boutique investment banks, and the role of these firms in M&A advisory work, private equity investment, and hedge fund management is discussed. Future developments will reflect the tensions between the technological advantages that accrue to large, complex banking organizations, and the relative strengths that small, focused boutique operations have in tacit human capital businesses.Less
This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. The major investment banks are getting bigger and bigger. Their work is increasingly codified and, as a result of legislation like the Sarbanes Oxley Act, is increasingly regulated. It is argued that these trends have encouraged the development of smaller boutique investment banks, and the role of these firms in M&A advisory work, private equity investment, and hedge fund management is discussed. Future developments will reflect the tensions between the technological advantages that accrue to large, complex banking organizations, and the relative strengths that small, focused boutique operations have in tacit human capital businesses.
R. Ford Denison
- Published in print:
- 2012
- Published Online:
- October 2017
- ISBN:
- 9780691139500
- eISBN:
- 9781400842810
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691139500.003.0004
- Subject:
- Biology, Evolutionary Biology / Genetics
This chapter introduces the three core principles of Darwinian agriculture. First, natural selection is fast enough, and has been improving plants and animals for long enough, that it has left few ...
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This chapter introduces the three core principles of Darwinian agriculture. First, natural selection is fast enough, and has been improving plants and animals for long enough, that it has left few simple, tradeoff-free opportunities for further improvement. Therefore, implicit or explicit acceptance of tradeoffs has been and will be key to crop genetic improvement, through biotechnology or traditional plant breeding methods. Second, competitive testing of individual adaptations by natural selection is more rigorous than nature's testing of natural ecosystems merely by endurance. Although testing by endurance shows sustainability, there may still be considerable room for improvement. Third, we should hedge our bets against future uncertainty with a greater variety of crops and of research approaches. The chapter argues that this bet-hedging will require allocating some land and other resources to crops and research programs that seem less promising today but may outperform today's winners if conditions change.Less
This chapter introduces the three core principles of Darwinian agriculture. First, natural selection is fast enough, and has been improving plants and animals for long enough, that it has left few simple, tradeoff-free opportunities for further improvement. Therefore, implicit or explicit acceptance of tradeoffs has been and will be key to crop genetic improvement, through biotechnology or traditional plant breeding methods. Second, competitive testing of individual adaptations by natural selection is more rigorous than nature's testing of natural ecosystems merely by endurance. Although testing by endurance shows sustainability, there may still be considerable room for improvement. Third, we should hedge our bets against future uncertainty with a greater variety of crops and of research approaches. The chapter argues that this bet-hedging will require allocating some land and other resources to crops and research programs that seem less promising today but may outperform today's winners if conditions change.
R. Ford Denison
- Published in print:
- 2012
- Published Online:
- October 2017
- ISBN:
- 9780691139500
- eISBN:
- 9781400842810
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691139500.003.0012
- Subject:
- Biology, Evolutionary Biology / Genetics
This chapter summarizes the book's main conclusions and cautions against exclusive reliance on any single approach. The book's central thesis is that nature's wisdom is found primarily in ...
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This chapter summarizes the book's main conclusions and cautions against exclusive reliance on any single approach. The book's central thesis is that nature's wisdom is found primarily in competitively tested individual adaptations, in wild species and sometimes still in cultivated ones, rather than in the overall structure of natural ecosystems. It notes how some biotechnology advocates underestimate the perfection of existing individual adaptations and suggests that most near-term opportunities for genetic improvement of crops or livestock will involve tradeoffs that had constrained natural selection in the past. The chapter considers two basic approaches to the problem of varying environments: phenotypic plasticity and bet-hedging. It also discusses bet-hedging in food production, the bet-hedging benefits of organic farming and animal agriculture, and the use of diversity for bet-hedging in agricultural research. Finally, it describes traditional agricultural sciences that have been more receptive to input from evolutionary biology than biotechnology has.Less
This chapter summarizes the book's main conclusions and cautions against exclusive reliance on any single approach. The book's central thesis is that nature's wisdom is found primarily in competitively tested individual adaptations, in wild species and sometimes still in cultivated ones, rather than in the overall structure of natural ecosystems. It notes how some biotechnology advocates underestimate the perfection of existing individual adaptations and suggests that most near-term opportunities for genetic improvement of crops or livestock will involve tradeoffs that had constrained natural selection in the past. The chapter considers two basic approaches to the problem of varying environments: phenotypic plasticity and bet-hedging. It also discusses bet-hedging in food production, the bet-hedging benefits of organic farming and animal agriculture, and the use of diversity for bet-hedging in agricultural research. Finally, it describes traditional agricultural sciences that have been more receptive to input from evolutionary biology than biotechnology has.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
In proposing macro markets, this book describes a substantial array of new markets, and attempts to indicate ways around some of the major barriers to the establishment and success of these markets. ...
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In proposing macro markets, this book describes a substantial array of new markets, and attempts to indicate ways around some of the major barriers to the establishment and success of these markets. These important barriers to the establishment of macro markets—perpetual claims, perpetual futures, options, swaps, and analogous markets—are the subject of most of the book. This introduction aims to give an idea of where the book is heading, what kinds of markets might be established, and a broad sense of whether such markets are in the realm of possibility. The different sections of the chapter are: The ideal: A world market for major income risks; Hedging income risk in today's markets; Markets as inventions; and Markets as accidents of history.Less
In proposing macro markets, this book describes a substantial array of new markets, and attempts to indicate ways around some of the major barriers to the establishment and success of these markets. These important barriers to the establishment of macro markets—perpetual claims, perpetual futures, options, swaps, and analogous markets—are the subject of most of the book. This introduction aims to give an idea of where the book is heading, what kinds of markets might be established, and a broad sense of whether such markets are in the realm of possibility. The different sections of the chapter are: The ideal: A world market for major income risks; Hedging income risk in today's markets; Markets as inventions; and Markets as accidents of history.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0002
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
One reaction to proposals for new markets is that the general public will not want to deal in them, because of some psychological inability to appreciate the benefits that the risk management may ...
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One reaction to proposals for new markets is that the general public will not want to deal in them, because of some psychological inability to appreciate the benefits that the risk management may offer—such a reaction is often given by people in the futures and options industry, who have seen many innovative contracts fail. The general public, it is asserted, will not trade directly in such futures, and if the reason they will not is that they do not appreciate the benefits of risk management, then it may be difficult for retailers of risk‐management services to repackage the contracts in a form that will interest them. However, the general public, including both individuals and firms, does use some risk‐management services, notably insurance policies—the insurance industry has not failed to market risk‐management policies to the general public, rather, their success has been highly variable. This chapter investigates whether the macro markets proposed by the book resemble the life insurance policies (for which there is a ready market), or whether they more resemble the disability or flood insurance markets or farmers’ hedging markets. This is done by analysing the psychological literature on demand for insurance. The issue of promoting proper public use of macro markets (by public education and proper product design) is also discussed.Less
One reaction to proposals for new markets is that the general public will not want to deal in them, because of some psychological inability to appreciate the benefits that the risk management may offer—such a reaction is often given by people in the futures and options industry, who have seen many innovative contracts fail. The general public, it is asserted, will not trade directly in such futures, and if the reason they will not is that they do not appreciate the benefits of risk management, then it may be difficult for retailers of risk‐management services to repackage the contracts in a form that will interest them. However, the general public, including both individuals and firms, does use some risk‐management services, notably insurance policies—the insurance industry has not failed to market risk‐management policies to the general public, rather, their success has been highly variable. This chapter investigates whether the macro markets proposed by the book resemble the life insurance policies (for which there is a ready market), or whether they more resemble the disability or flood insurance markets or farmers’ hedging markets. This is done by analysing the psychological literature on demand for insurance. The issue of promoting proper public use of macro markets (by public education and proper product design) is also discussed.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0003
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
Most people are interested in hedging risk of claims on long‐term income flows, rather than on the risk of the next month's or next year's income, and this means that any market that allows hedgers ...
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Most people are interested in hedging risk of claims on long‐term income flows, rather than on the risk of the next month's or next year's income, and this means that any market that allows hedgers to protect themselves from information that is adverse to their income over the indefinite future must be a market in the present value (capital value) of this income stream, not a conventional futures or options market in the income itself. This chapter considers two ways in which such new markets, where the information about income flows is so intangible, could be created. One way is to create a sort of derivative market, based on an index of observed prices in other (relatively illiquid) markets for claims on the same income stream (settlement based on cash‐market asset price). Liquid markets in residential real estate might be set up this way (this example is pursued in the chapter), and such a method of insuring against adverse information is analogous to that used to provide fire insurance, where the income stream is the flow of rents (or imputed rents) on the property, and the maximum insurance is the present value of this stream inferred from the sale prices of comparable properties. The other way is to create a market for perpetual, or at least long‐horizon, claims on an income flow itself, making no use of prices of claims on the flow in any other market; the income flow can be a theoretical construct of statisticians, not the dividend on any tradable asset, and liquid markets in national incomes might be set up in this way (settlement based on measures of income rather then price, achieved either through perpetual claims or perpetual futures markets).Less
Most people are interested in hedging risk of claims on long‐term income flows, rather than on the risk of the next month's or next year's income, and this means that any market that allows hedgers to protect themselves from information that is adverse to their income over the indefinite future must be a market in the present value (capital value) of this income stream, not a conventional futures or options market in the income itself. This chapter considers two ways in which such new markets, where the information about income flows is so intangible, could be created. One way is to create a sort of derivative market, based on an index of observed prices in other (relatively illiquid) markets for claims on the same income stream (settlement based on cash‐market asset price). Liquid markets in residential real estate might be set up this way (this example is pursued in the chapter), and such a method of insuring against adverse information is analogous to that used to provide fire insurance, where the income stream is the flow of rents (or imputed rents) on the property, and the maximum insurance is the present value of this stream inferred from the sale prices of comparable properties. The other way is to create a market for perpetual, or at least long‐horizon, claims on an income flow itself, making no use of prices of claims on the flow in any other market; the income flow can be a theoretical construct of statisticians, not the dividend on any tradable asset, and liquid markets in national incomes might be set up in this way (settlement based on measures of income rather then price, achieved either through perpetual claims or perpetual futures markets).
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations ...
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There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations as do many risks currently traded in financial markets. If those who retail insurance policies against risks of changes in values of claims on incomes or service flows are to be able to tailor their insurance to the various exposures that their different clients have to these risks, they will want to layoff in hedging markets the risks of changes in these income factors that influence them because they are providing the insurance policies. This chapter considers some of the most salient of these other markets: real estate, unincorporated business, and privately held corporations, consumer and producer price index futures, agriculture, and art and collectibles. It also presents some ideas on systematic approaches to finding other markets, including modelling the tendency for co‐movement of incomes and inferring the underlying factors, i.e. looking for the major risk factors to incomes for which new markets would be most useful.Less
There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations as do many risks currently traded in financial markets. If those who retail insurance policies against risks of changes in values of claims on incomes or service flows are to be able to tailor their insurance to the various exposures that their different clients have to these risks, they will want to layoff in hedging markets the risks of changes in these income factors that influence them because they are providing the insurance policies. This chapter considers some of the most salient of these other markets: real estate, unincorporated business, and privately held corporations, consumer and producer price index futures, agriculture, and art and collectibles. It also presents some ideas on systematic approaches to finding other markets, including modelling the tendency for co‐movement of incomes and inferring the underlying factors, i.e. looking for the major risk factors to incomes for which new markets would be most useful.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0006
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
When creating indices intended for use in cash settlement of futures contracts (or perpetual claims or options, or swaps, or other over‐the‐counter forward contracts or retail insurance contracts), ...
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When creating indices intended for use in cash settlement of futures contracts (or perpetual claims or options, or swaps, or other over‐the‐counter forward contracts or retail insurance contracts), it is critical that that each index represents value associated with a standard claim on future income (or services). The contract settlement must reflect the price of claims on income streams, so that the market can be used to hedge the risk associated with the claims, but the problem is that the available observations on prices or incomes may apply to dissimilar claims, and that standardization in the indices used to settle contracts is essential to liquidity in these markets. This chapter first reviews some existing index number methods, and then extends these methods to deal with the problems described. Chain index and hedonic index number methods are reviewed, and ordinary repeated‐measures indices (like the repeat sales indices) are shown to be in a sense a special case of these, and to have strong parallels to some existing indices used to settle contracts. The last part of the chapter introduces the hedonic repeated‐measures index to allow for control of changing price of quality variables, while retaining the repeated‐measures design.Less
When creating indices intended for use in cash settlement of futures contracts (or perpetual claims or options, or swaps, or other over‐the‐counter forward contracts or retail insurance contracts), it is critical that that each index represents value associated with a standard claim on future income (or services). The contract settlement must reflect the price of claims on income streams, so that the market can be used to hedge the risk associated with the claims, but the problem is that the available observations on prices or incomes may apply to dissimilar claims, and that standardization in the indices used to settle contracts is essential to liquidity in these markets. This chapter first reviews some existing index number methods, and then extends these methods to deal with the problems described. Chain index and hedonic index number methods are reviewed, and ordinary repeated‐measures indices (like the repeat sales indices) are shown to be in a sense a special case of these, and to have strong parallels to some existing indices used to settle contracts. The last part of the chapter introduces the hedonic repeated‐measures index to allow for control of changing price of quality variables, while retaining the repeated‐measures design.
Lars Oxelheim and Clas Wihlborg
- Published in print:
- 2008
- Published Online:
- May 2009
- ISBN:
- 9780195335743
- eISBN:
- 9780199868964
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195335743.003.0006
- Subject:
- Economics and Finance, Financial Economics
The exactness of traditional measures of transaction and translation exposures is misleading because their relevance is questionable. The macroeconomic exposure coefficients discussed in this book ...
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The exactness of traditional measures of transaction and translation exposures is misleading because their relevance is questionable. The macroeconomic exposure coefficients discussed in this book are not exact due to measurement errors, but they refer to true economic concerns. Uncertainty about the exact exposure can affect the choice of financial hedge instrument. This chapter addresses issues of implementation of a given exposure management strategy, while the choice of strategy is discussed in Chapter 8. Standard methods of covering and hedging conventional transactions and translation exchange rate exposures and interest rate exposures are reviewed and described before hedging based on macroeconomic exposure coefficients is discussed. It is shown how the size of hedge contracts can be calculated based on these coefficients. Interdependence between macroeconomic variables and uncertainty about the coefficients affect the size of hedge contracts and the choice of instruments. Financial options are particularly useful when exposures are uncertain.Less
The exactness of traditional measures of transaction and translation exposures is misleading because their relevance is questionable. The macroeconomic exposure coefficients discussed in this book are not exact due to measurement errors, but they refer to true economic concerns. Uncertainty about the exact exposure can affect the choice of financial hedge instrument. This chapter addresses issues of implementation of a given exposure management strategy, while the choice of strategy is discussed in Chapter 8. Standard methods of covering and hedging conventional transactions and translation exchange rate exposures and interest rate exposures are reviewed and described before hedging based on macroeconomic exposure coefficients is discussed. It is shown how the size of hedge contracts can be calculated based on these coefficients. Interdependence between macroeconomic variables and uncertainty about the coefficients affect the size of hedge contracts and the choice of instruments. Financial options are particularly useful when exposures are uncertain.
Herman Cappelen
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199644865
- eISBN:
- 9780191739026
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199644865.003.0002
- Subject:
- Philosophy, Metaphysics/Epistemology
This chapter considers the meaning of ‘intuitive’, ‘seem’ and their cognates in English. There is extensive discussion of hedging, the role of ‘seem’ as a generic evidential, and the context ...
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This chapter considers the meaning of ‘intuitive’, ‘seem’ and their cognates in English. There is extensive discussion of hedging, the role of ‘seem’ as a generic evidential, and the context sensitivity of ‘intuitive’ and ‘intuitively’. In particular it is argued that when ‘intuitively’ or ‘it seems (to me)’ is used to modify propositions, it functions as a hedge rather than also serving to denote a certain class of mental states (intuitions or seemings) pace George Bealer. The upshot is that the claim that philosophers rely on intuitions as evidence is false if ‘intuitions’ is treated as having its standard meaning in English rather than as a technical term in philosophy.Less
This chapter considers the meaning of ‘intuitive’, ‘seem’ and their cognates in English. There is extensive discussion of hedging, the role of ‘seem’ as a generic evidential, and the context sensitivity of ‘intuitive’ and ‘intuitively’. In particular it is argued that when ‘intuitively’ or ‘it seems (to me)’ is used to modify propositions, it functions as a hedge rather than also serving to denote a certain class of mental states (intuitions or seemings) pace George Bealer. The upshot is that the claim that philosophers rely on intuitions as evidence is false if ‘intuitions’ is treated as having its standard meaning in English rather than as a technical term in philosophy.
Roy C. Smith, Ingo Walter, and Gayle Delong
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780195335934
- eISBN:
- 9780199932146
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195335934.003.0010
- Subject:
- Economics and Finance, Economic Systems
Hedge funds, private equity investments, and other forms of alternative investments that offer the possibility of enhanced portfolio returns on a risk-adjusted basis have been available to ...
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Hedge funds, private equity investments, and other forms of alternative investments that offer the possibility of enhanced portfolio returns on a risk-adjusted basis have been available to sophisticated investors and institutions for many years. In the early 2000s, trillions of dollars of new investment funds that flowed into alternative investments and contributed to the bubbles of the 2004–2007 markets suffered proportionately when the bubble burst. Banks were attracted to and participated in the surge in alternative investments in many ways, as lenders, agents, and as principal investors in funds distributed to clients. The multiple exposures of banks to mortgage-backed and nonmortgage asset-backed securities, and to hedge funds and private equity funds caused them a high degree of distress, forced writedowns of assets, and compelled banks to raise additional capital. Consequently, many banks that were once active in alternative asset investments became much less so as the industry deleveraged and lost momentum. By 2010, only a few banks were still active as major players in this industry.Less
Hedge funds, private equity investments, and other forms of alternative investments that offer the possibility of enhanced portfolio returns on a risk-adjusted basis have been available to sophisticated investors and institutions for many years. In the early 2000s, trillions of dollars of new investment funds that flowed into alternative investments and contributed to the bubbles of the 2004–2007 markets suffered proportionately when the bubble burst. Banks were attracted to and participated in the surge in alternative investments in many ways, as lenders, agents, and as principal investors in funds distributed to clients. The multiple exposures of banks to mortgage-backed and nonmortgage asset-backed securities, and to hedge funds and private equity funds caused them a high degree of distress, forced writedowns of assets, and compelled banks to raise additional capital. Consequently, many banks that were once active in alternative asset investments became much less so as the industry deleveraged and lost momentum. By 2010, only a few banks were still active as major players in this industry.
Paul Langley
- Published in print:
- 2008
- Published Online:
- September 2008
- ISBN:
- 9780199236596
- eISBN:
- 9780191717079
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199236596.003.0011
- Subject:
- Economics and Finance, Financial Economics
This concluding chapter begins with a discussion of the sub-prime mortgage crisis. It then reviews the discussions in the preceding chapters, addressing the conceptual themes of financial networks, ...
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This concluding chapter begins with a discussion of the sub-prime mortgage crisis. It then reviews the discussions in the preceding chapters, addressing the conceptual themes of financial networks, financial power, financial identity, and financial dissent.Less
This concluding chapter begins with a discussion of the sub-prime mortgage crisis. It then reviews the discussions in the preceding chapters, addressing the conceptual themes of financial networks, financial power, financial identity, and financial dissent.
Hendrik S. Houthakker and Peter J. Williamson
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780195044072
- eISBN:
- 9780199832958
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019504407X.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book puts economics to work on the daily problems faced by investors, traders, speculators, and brokers as they wrestle with increasingly diverse and complex financial markets. Drawing mainly on ...
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This book puts economics to work on the daily problems faced by investors, traders, speculators, and brokers as they wrestle with increasingly diverse and complex financial markets. Drawing mainly on data direct from the financial behavior of households, corporations, and governments in the USA, the authors show how accessible but rigorous economics can help in making sense of the financial markets (including those in equities, bonds, mutual funds, options, and futures) and of the ways in which these markets are organized. The authors contend that many of the approaches that might seem random or counter‐intuitive at first sight are in fact rational and often predictable responses to events – but they also find that real markets stray from the rational economic path – financial markets make mistakes, and inefficiencies do exist. When they do, unique profit opportunities arise that the authors demonstrate throughout the book. The book differs from many works on financial markets in that it provides a systematic framework for analyzing the impact of events on security prices and trading volumes; explains how the value of a firm's assets and dividend flow will influence the prices of its securities; provides the tools to identify and manage different types of risk; discusses what protection investors can expect from financial market regulators and what happens when a clique tries to squeeze or corner a market; includes a detailed treatment of futures and their role at the core of today's financial markets, and explains why they should be of concern to more and more investors and traders; shows how to use modern corporate strategy tools in security analysis; and shows how to discover inefficiencies in financial markets and profit from them. By bringing together information on the institutional details of financial markets with the concepts and tools of economic theory, the book will be of value to practitioners and students of financial markets alike.Less
This book puts economics to work on the daily problems faced by investors, traders, speculators, and brokers as they wrestle with increasingly diverse and complex financial markets. Drawing mainly on data direct from the financial behavior of households, corporations, and governments in the USA, the authors show how accessible but rigorous economics can help in making sense of the financial markets (including those in equities, bonds, mutual funds, options, and futures) and of the ways in which these markets are organized. The authors contend that many of the approaches that might seem random or counter‐intuitive at first sight are in fact rational and often predictable responses to events – but they also find that real markets stray from the rational economic path – financial markets make mistakes, and inefficiencies do exist. When they do, unique profit opportunities arise that the authors demonstrate throughout the book. The book differs from many works on financial markets in that it provides a systematic framework for analyzing the impact of events on security prices and trading volumes; explains how the value of a firm's assets and dividend flow will influence the prices of its securities; provides the tools to identify and manage different types of risk; discusses what protection investors can expect from financial market regulators and what happens when a clique tries to squeeze or corner a market; includes a detailed treatment of futures and their role at the core of today's financial markets, and explains why they should be of concern to more and more investors and traders; shows how to use modern corporate strategy tools in security analysis; and shows how to discover inefficiencies in financial markets and profit from them. By bringing together information on the institutional details of financial markets with the concepts and tools of economic theory, the book will be of value to practitioners and students of financial markets alike.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management ...
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This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management of the biggest economic risks facing governments and society. Robert Shiller argues that we have largely the wrong financial markets, and that establishing new ones may fundamentally alter and diminish international economic fluctuations (and thus enable better risk management) and reduce the inequality of incomes. Shiller argues that although some risks, such as natural disaster or temporary unemployment, are shared by society, most risks are borne by the individual, and standards of living are determined by luck. He investigates whether a new technology of markets could make risk sharing possible and shows how new contracts could be designed to hedge all manner of risks to the individual's living standards. He proposes new international markets for perpetual claims on national incomes, and on components and aggregates of national incomes, concluding that these markets may well dwarf our stock markets in their activity and significance. He also argues for new liquid international markets for residential and commercial property. Establishing such unprecedented new markets presents some important technical problems that Shiller attempts to solve with proposals for implementing futures markets on perpetual claims on incomes, and for the construction of index numbers for cash settlement of risk management contracts. These new markets could fundamentally alter and diminish international economic fluctuations, and reduce the inequality of incomes around the world. Much of the book is technical, and it is intended mostly for economists, contract designers at futures and options exchanges, originators of swaps and other financial deals, and designers of retail products associated with risk management (such as insurance, pension plans, and mortgages). However, the material within the book is mostly arranged so that a non‐technical reader can follow the broad themes, and until Ch. 6, most of the technical material is relegated to appendices.Less
This book, which is part of the distinguished Clarendon Lectures in Economics series, puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management of the biggest economic risks facing governments and society. Robert Shiller argues that we have largely the wrong financial markets, and that establishing new ones may fundamentally alter and diminish international economic fluctuations (and thus enable better risk management) and reduce the inequality of incomes. Shiller argues that although some risks, such as natural disaster or temporary unemployment, are shared by society, most risks are borne by the individual, and standards of living are determined by luck. He investigates whether a new technology of markets could make risk sharing possible and shows how new contracts could be designed to hedge all manner of risks to the individual's living standards. He proposes new international markets for perpetual claims on national incomes, and on components and aggregates of national incomes, concluding that these markets may well dwarf our stock markets in their activity and significance. He also argues for new liquid international markets for residential and commercial property. Establishing such unprecedented new markets presents some important technical problems that Shiller attempts to solve with proposals for implementing futures markets on perpetual claims on incomes, and for the construction of index numbers for cash settlement of risk management contracts. These new markets could fundamentally alter and diminish international economic fluctuations, and reduce the inequality of incomes around the world. Much of the book is technical, and it is intended mostly for economists, contract designers at futures and options exchanges, originators of swaps and other financial deals, and designers of retail products associated with risk management (such as insurance, pension plans, and mortgages). However, the material within the book is mostly arranged so that a non‐technical reader can follow the broad themes, and until Ch. 6, most of the technical material is relegated to appendices.
