Options With Options - Hedging With Options Requires Making Decisions
Despite the appeal of the purchased option hedge, which explicitly limits price risk allowing the hedger to enjoy the benefit of advantageou
This Year’s Model – New Lending Practices and Related Accounting Concerns
The first pitfall to avoid is using a standard pay-fixed/receive-floating interest rate swap in conjunction with this loan. This plain-vanil
Assessing Interest Rate Caps
Caps do work as advertised, with some qualifications. In a perfect application, the cap buyer would seek a structure corresponding with the
Free Money
The issue gets a little more complicated when interest swaps are introduced into the equation. Interest rate swaps can be used to convert va
Interest Rate Swaps: Accounting vs. Economics
Although accounting rules undergo virtually ongoing review and adjustment, the genesis of the current framework is Statement of Financial Ac
Incorporating Prepayment Risk Considerations When Making Hedging Decisions
This article describes the basic framework for measuring interest rate risk at financial institutions and focuses attention on problems asso