BASIS POINT

WHAT IS STRUCTURED FINANCE ?

 

STRUCTURED FINANCE MEANS THE QUANTITATIVE TECHNIQUES NEEDED TO :

  1. MEASURE AND MANAGE RISKS,
  2. DETERMINE OPTIMUM PRICING,
  3. TAKE ADVANTAGE OF LEVERAGE AND MARKET INEFFICIENCIES,
  4. UNDERSTAND THE FULL-RANGE OF PRODUCTS AND REGULATIONS.

PROVEN TECHNIQUES IN STRUCTURE FINANCE ARE :

    • UNIVARIATE RISK ASSESSMENT.
    • UNIVARIATE PRICING.
    • DEPENDENCY.
    • RATING MIGRATION AND ASSET CORRELATION.
    • CDO PRICING.
    • CDO RISK MANAGEMENT.
    • CASH AND SYNTHETIC CDOs.
    • THE CDO METHODOLOGIES DEVELOPED BY STANDARD  & POOR’S.

THE UNDERSTANDING OF SUCH TECHNIQUES ARE CRUCIAL IN ORDER TO :

  1. TAILOR RISK AND RETURNS OF PRODUCTS FOR SPECIFIC INVESTORS SUCH AS BUY-AND-HOLD, ARBITRAGE-DRIVEN INVESTORS, AND HEDGE FUNDS.
  2. UTILIZE APPROPRIATE RISK-MITIGATION STRATEGIES DEPENDING ON THE RELEVANT INVESTMENT HORIZON.
  3. UNDERSTAND AND PRICE THE VARIOUS INSTRUMENTS UNDER THE RISK-NEUTRAL MEASURE.
  4. EMPLOY RISK MEASUREMENT TECHNIQUES SUCH AS RATINGS, AND « THE GREEKS » IN STRUCTURED DEALS.

OUR COMMENT : LIFE IS A SCHOOL OF PROBABILITY…

PHLDUCX