Synopsis
A primer on the economic functions of derivatives in fiduciary law. Written for fiduciaries, senior executives, and corporate lawyers, the book covers derivative risk, the regulatory industries involved, and relevant case law. Utilizing the functional perspective first proposed by 1997 Nobel Prize winner Robert C. Merton, the author begins with the basic building blocks of forwards and options, and then proceeds to build an analytical framework explaining the uses of derivatives in the business world. Annotation c. by Book News, Inc., Portland, Or.
From the Back Cover
The First Systematic, Plain-English Book That Makes Sense of OTC Derivatives. "This book bridges a critical gap, which heretofore has kept finance specialists from understanding the legal point of view and lawyers from understanding the financial point of view. It is the Rosetta Stone of law and financial derivatives."--Don M. Chance, First Union Professor of Financial Risk Management, Virginia Tech. "Robert McLaughlin's OTC Derivatives Products contains an elaborate and insightful treatment of the theoretical foundation of fidicuiary law... Mr. McLaughlin's book is a pioneering work that will help courts, regulators, and practitioners alike to develop coherent analysis in classifying and designing the law applicable to relationships involving derivatives."--Tamar Frankel, Professor of Law, Boston University School of Law, Author of The Regulation of Money Managers and Securitization: Structured Financing, Financial Asset Pools, and Asset-Backed Securities. Over-the-Counter Derivative Products analyzes derivatives from their economic functions. It begins with the two simple "building blocks" from which all derivatives are constructed: forwards and options. It shows how the building blocks are used to achieve derivatives' three "pure" risk management functions, namely: (i) hedging or shedding unwanted risks, (ii) insuring against loss, and (iii) minimizing risks through diversification. That background: instantly clarifies the essential economic attributes of the endless stream of products; shows how derivatives, used properly, can solve not only an organization's own but also its investors', customers', and other business partners' vexing business problems; provides a business and legal risk management framework that can be used not only for today's derivatives but also for other and future financial innovation. Robert McLaulghlin's vital book will become your lifeline to derivatives knowledge and to business and investment success.
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